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By Chino S. Leyco, Reporter
THE government on Monday failed anew to secure
short-term borrowings from the auction of Treasury bills despite
last Thursday’s decision by the Bangko Sentral ng Pilipinas (BSP)
to shut down some of the windows of its Special Deposit Account (SDA).
Financial market players had blamed the SDA for
the government’s failure to secure short-term money during the
regular T-bill auctions since the BSP facility, which offered higher
rates, had been luring investors.
The Bureau of Treasury in turn has refused to
succumb to investors’ bids, as this would push benchmark interest
rates higher, thus removing one of the key pillars of the
country’s recent economic gains.
With its two main revenue-generating agencies
warning of their likely inability to meet collection targets this
year, the government is looking to borrow its requirements to pump
prime the economy and prevent the country from taking a hit from a
slowing US, the Philippines’ largest export market.
At Monday’s auction, the Bureau of Treasury
rejected all bids for T-bills, citing unreasonable rates from the
banks.
Had the government accepted banks’ bids, the
benchmark 91-day rate, which lenders use in pricing their loans,
would have risen to 5.026 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
worth of the three-month debt papers, but banks were willing to buy
only as much as P520 million.
It was the same story for the six-month and one
year papers, as bids for the IOUs reached P910 million and P1.11
billion, respectively, or way below the P2 billion and P3 billion
the government had planned to sell. Rates for the 182- and 364-day
papers would have risen to 5.543 percent and 5.895 percent,
respectively, had the treasury bureau accepted the bids.
“The market of course is just fence-sitting
because of the major adverse development in the US,” Finance
Undersecretary Roberto B. Tan, who also serves as the acting
national treasurer, told reporters after the auction.
He said banks are “hanging on [to their cash].
They don’t want to take risks right now because there might be
further adverse development coming through the week in the US.”
Tan admitted that the government had expected
lower bids in light of the BSP’s decision last week to shut down
some of its SDA windows and trim the rates on the remaining ones.
“That’s true [but] I think because of a long
weekend ahead of us and the sudden negative news from the US [banks]
would probably [be] standing by,” Tan said, referring to the
“surprising” result of the auction.
Given its failure to secure short-term money,
the government would continue to sell the T-bills through
negotiations, the finance official said. “It’s always been there
[but] we’ll come up with new guide lines. It’s part of our fund
raising vehicles,” he added.
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