THE GOVERNMENT rejected all bids for the Treasury bills (T-bills) it offered on Monday following the surge in rates as investors prefer to keep their cash amid the coronavirus disease 2019 (COVID-19) pandemic.

The Bureau of the Treasury (BTr) on Monday rejected all bids for the T-bills worth P17.2 billion across all tenors versus its initial plan to raise P20 billion.

Broken down, total bids for 91-day papers only reached P7.6 billion, short of the P10-billion program. Had the Treasury made a full award of these bids, the three-month papers would have fetched an average rate of 4.517%, a 149.3-basis-point (bp) surge from the 3.024% fetched in the March 16 auction.

Bids for the 182-day T-bills were also below the P5-billion plan, with total tenders reaching just P4.06 billion. Had the BTr made a full award, the average rate for six-month papers would have settled at 4.259%, up 86.1 bps from the 3.398% fetched previously.

The Treasury likewise rejected bids worth P5.55 billion for the 364-day papers, even as the total was above the P5-billion plan. If the tenor was fully awarded, the one-year securities would have fetched an average rate of 4.402%, up 85 bps from the previous rate of 3.557%.

Yesterday was the third consecutive auction where the BTr rejected all tenders due to higher rates, or since it made a partial award of T-bills on March 16, the day before the Luzon-wide enhanced community quarantine was implemented.

National Treasurer Rosalia V. de Leon told reporters via Viber after the auction that they decided to not accept any tenders as “all bids [were] over the roof,” adding that she “heard banks are giving out ultra high deposit rates.”

However, Ms. De Leon said the 35-day T-bills the BTr will reintroduce on Tuesday “should be appealing” to investors as they have to “put their money to work.”

“[35-day papers have] very short maturity so funds will be available when needed. There is still opportunity cost for holding to cash,” she said.

For Robinsons Bank Corp. peso debt trader Kevin S. Palma, “the BTr once again flexed its strong cash position and opted to reject bids for a second straight week.”

“Market players sought higher yields due to continued global uncertainties surrounding COVID-19,” Mr. Palma added.

Meanwhile, Ms. De Leon said the BTr received yesterday the payment for P300 billion worth of three-month government securities that the central bank had agreed to buy last week.

She said the papers were “revenue neutral,” with the repo rate and deposit rate at zero percent.

The Bangko Sentral ng Pilipinas’ repurchase agreement with the Treasury is renewable for another three months.

The proceeds will be used to help fund the government’s efforts to address the COVID-19 pandemic.

Luzon was placed under enhanced community quarantine until April 12 to contain and slow the spread of the virus that has infected 1,418 and killed 71 in the country as of Sunday afternoon.

The Treasury has set a P190-billion local borrowing program for April, broken down into P130 billion in T-bills and P60 billion in Treasury bonds.

The government plans to raise P1.4 trillion this year from local and foreign lenders to plug its budget deficit, which is capped at 3.2% of gross domestic product. — B.M. Laforga