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By Angelo S. Samonte, Reporter
Strong demand for short-term
government securities has prompted the government to increase its
total volume issued to accommodate investor appetite during
Monday’s auction.
Average interest rate for the
91-day T-bills dipped to an all-time low of 2.860 percent, 13.8
basis points less than the previous rate of 2.998 percent two weeks
ago.
As total tenders reached P3.27
billion for the P500 million offer, the government decided to add
P200 million to the noncompetitive bids and accepted P700-million
worth of the 3-month debt papers.
On the other hand, the six-month
T-bill rates increased by 4.7 basis points to 3.509 percent, higher
than the last auction’s 3.462 percent, while total tenders reached
P6.55 billion for the P1.5 billion on offer.
The government increased the
noncompetitive bids by P600 million, which raised the total accepted
amount to P2.1 billion.
The government dropped all offers
for one-year securities, which reached P4.9 billion.
National Treasurer Omar Cruz said
there was a huge client demand for 3-month and 6-month securities to
explain the big offers from investors. In contrast, buyers had less
appetite for securities with much longer term.
The Bureau of Treasury said
earlier that it may stop issuing T-bills if the tenors come close to
the maturing off-the-run two-year T-bonds it has issued.
Cruz said off-the-run T-bonds
could take over the T-bills because bonds are more liquid, making
these more attractive to investors.
“The T-bill market is very
illiquid compared to the T-bonds. And when the two-year bonds become
one-year, 9 months, and 6 months, they will become a natural
short-term benchmark,” he said. “The T-bills will become
obsolete.”
The market, seeing a very strong
preference for short-term securities, is poised to buy off- the-run
bonds because of their narrower range apart from their liquidity,
making them more stabile than T-bills.
However, Cruz said the Treasury
has the option to continue issuing T-bills to satisfy short-term
market demand as the off-the-run bonds mature, but added it would
need close coordination with the money market.
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