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BTr rejects all Treasury bill bids due to high rates |
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BTr rejects all Treasury bill bids due to high rates
The Manila Bulletin 03/29/2005 The Bureau of Treasury rejected all bids during yesterday’s fortnightly Treasury bill auction to prevent yields from rising sharply. If the government had accepted all tenders for the 91-day T-bill, its bellwether average yield would have risen to 6.926 percent from 6.539 percent previously. The highest bid for the 91–day paper was 7.25 percent, outpacing the 7.07 percent prevailing in the secondary market. Another reason for the government’s decision to reject all bids was the underwhelming volume of tenders, which totaled nearly P8.60 billion for the P12 billion of T-bills on offer. Traders said the higher bids were prompted by expectations that the central bank may tighten policy as early as April, during its next monthly rate-setting meeting. Such expectations came about after senior central bank officials said they will study their options following the latest US interest rate increase last week. "That statement sent a signal to the market that there could be a change in policy," said a local bank trader. However, National Treasurer Omar Cruz said he believed the central bank’s statement was misinterpreted, noting that monetary officials still maintain that the prevailing high inflation is primarily supply-driven. "The Bureau of Treasury doesn’t need the money. I know my liquidity. It’s very comfortable," Cruz told reporters following the auction. "If anything, they (banks) have done me a favor by saving on my negative carry." Negative carry is when the cost of money borrowed to buy securities or financial futures positions is higher than the return on those positions. Cruz said there remains ample liquidity in the domestic market and overseas. (Dow Jones) |
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