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By Chino S. Leyco, Reporter
CITING unreasonably high rates, the government
on Monday failed to secure short-term borrowings after it rejected
all bids for debt papers scheduled for sale.
Had the government accepted banks’ bids, the
benchmark 91-day Treasury bill rate, which lenders use in pricing
their loans, would have risen to 4.959 percent from 3.673 percent
during the last successful auction of the three-month IOU on January
21.
The government was set to sell P1.5 billion of
the 91-day T-bills but banks were willing to buy only P510 million.
“We find the bids very unreasonable, and
apparently there’s not much demand right now so we decided to
reject the bids,” Finance Undersecretary Roberto B. Tan told
reporters after the auction.
Tan, who also serves as acting national
treasurer, said the government is unfazed at the failed borrowing as
it expects money from other sources to come in, including a
$300-million program loan from the Asian Development Bank.
The loan will finance local government finance
reform and will arrive this month, he said.
“We have other sources. Of course collection
and revenues,” he said.
This week’s auction was the third straight
occasion the government rejected bids for the 91-day debt papers due
to high rates, leading the Bureau of Treasury to consider suspending
the offering altogether for the rest of the year.
“We’re not decided, but we’re studying it
very seriously,” Tan said.
Bids for the six-month T-bill also rose to 5.612
percent from 4.675 percent during the last successful auction, while
bids for the one-year paper climbed to 6.041 percent from 5.266
percent previously.
The government was ready to sell P2 billion of
the 182-day, and P3 billion of the 364-day papers, for a total
P6.5-billion worth of T-bills.
Banks’ efforts to raise the yield for the
short-term IOUs had been ascribed to their pursuit of a higher
premium in light of domestic political noise arising from a
graft-tainted botched telecom deal being traced to Malacañang.
Long-term investors more interested in
fundamentals
The Bangko Sentral ng Pilpinas however said the
political noise is unlikely to tarnish the country’s image among
long-term investors who are more interested in economic
fundamentals.
BSP Governor Amando M. Tetangco Jr. said
investors know how to distinguish the fundamentals from the noise,
given similar domestic incidents in the past.
“We have now the most stable macro[economic]
fundamentals we have had in the past two to three decades.
Nevertheless, this ability to distinguish between the two has never
precluded market traders, who thrive on volatility, to take
advantage of political noise,” Tetangco told reporters.
“What I perceive would concern the market is
if these developments persist and start to affect the implementation
of economic reforms,” he added.
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