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By Maricel E. Burgonio, Reporter
THE Bangko Sentral ng Pilipinas (BSP) warned
government about pursuing its negotiated borrowings.
The warning came after the Bureau of Treasury
pursued the negotiated sale of debt papers amid failed auctions of
the same owing to too high bids sought by banks.
BSP Governor Amando Tetangco Jr. said a more
transparent bidding system leads to improved efficiency in price
discovery or determination of prices.
“It is always, in my experience, better to
work within the market framework,” he said.
“The [treasury bureau] will do what is best to
meet their goals and objectives. I am certain they would, at the
same time, consider the best principles of transparency in trading,
pricing,” he added.
In contrast, the bureau believes the government
could get a better deal through negotiated sales of T-bills since it
won’t be forced into accepting the high rates sought by lenders.
Since February, the bureau has rejected all bids
for the short-term IOUs.
The government has since announced that it would
suspend auctions of the debt papers scheduled for the second
quarter. Affected are the benchmark 91- and 182-day T-bills.
Based on its bond offering schedule, the
treasury bureau will offer 364-day papers in the second quarter
amounting to P6 billion a month, or a total of P18 billion during
the three-month period.
Financial market players had been asking the
central bank to wind down its special deposit accounts (SDA) since
the higher rates this facility had been offering was discouraging
investors from putting their money in other instruments, such as
stocks and government securities or debt papers.
In the last policy meeting, the Monetary Board
decided to keep its overnight rates steady due to risks of inflation
this year on the back of skyrocketing oil and food prices worldwide.
However, it decided to refine its special deposit account (SDA),
closing some short-term windows while trimming the rates offered on
the rest.
Despite the refinement, the government still
failed to secure short-term borrowings in succeeding auctions.
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