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DESPITE the government’s difficulties in raising funds through the
Treasury bills and bonds, the Bangko Sentral ng Pilipinas (BSP) said
it is unlikely to cut its special deposit account (SDA) rate any
time soon.
Banks and other investors taking part in the
regular auctions of government securities or IOUs have been trying
to bid up rates for these debt papers in exchange for parting with
their money, citing the higher yield offered by the SDA.
Talking to reporters last Friday, BSP Gov.
Amando M. Tetangco Jr. however was non-committal on whether the
central bank would lower the SDA rate or suspend a rule allowing
banks’ trust departments and government owned and controlled
corporations (GOCCs) to tap this facility, just so the government
can borrow at lower rates from local lenders.
For over a month, the Bureau of Treasury has
been rejecting banks’ bids for the T-bills and bonds, explaining
that they were throwaway bids. In the last auction for the
three-month debt paper, lenders, for example, sought a rate
approaching the 5.5 percent yield offered by a six-month placement
with the SDA.
Both placements at the SDA and T-bills are
subject to 20 percent withholding tax but investing in the
government IOUs would incur banks additional transaction costs.
Finance Undersecretary Roberto B. Tan, who is
also treasury bureau acting chief, had said banks’ bids were very
unreasonable, reflecting their lack of serious interest in the
government debt papers.
“You know where banks are putting in their
money,” Tan had said, referring to the central bank’s SDA.
Due to lenders’ throwaway bids, the government
is contemplating on canceling future auctions of T-bills.
The BSP opened its SDA to GOCCs and banks’
trust departments to siphon off excess money, which if left
circulating, could stoke higher inflation.
-- Chino S. Leyco
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