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By Chino S. Leyco, Reporter
AFTER it failed to secure borrowing from
debt-paper sale in recent weeks, the Bureau of Treasury has decided
to negotiate government’s rates rather than do a Dutch auction in
which bid rates are lowered incrementally.
In a memorandum, Finance Undersecretary Roberto
B. Tan, who also serves as the national treasurer, said the decision
is to sell anew government securities through negotiation without
any prior announcement.
Tan, however, said government-owned and
controlled corporations (GOCCs) can buy these securities over the
counter to spur flexibility on their future borrowings.
“We’re not correlating these with each
other,” Tan said, referring to concerns that this was the result
of four consecutive rejections that the government made in their
previous auctions of bills and bonds.
Marcelo Ayes, Rizal Commercial Bank Corp. (RCBC)
vice-president, said the Treasury may be able to get better price
this time, although the decision to sell government issue at
negotiated rates may result in uncertainties.
“Moreover, Dutch auction is more transparent
than negotiation,” Ayes said, adding that negotiated rates cannot
be used as a benchmark for banks because they are prone to be
concluded “under the table.”
At the secondary market Tuesday, the 91-day
Treasury bill was at 4.55 percent.
“We project that it will rise to 5 percent in
June this year,” Ayes said.
On Monday’s auction, the benchmark T-bill
rate, which lenders use in pricing their loans, was rejected but it
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 cited unreasonable rates of
banks.
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,” Tan told reporters after the auction.
This week’s auction was the two 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.
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.
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