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Government rejects all bids for Treasury bills |
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By Des Ferriols
The Philippine Star 07/05/2005 The government rejected yesterday all bids received for Treasury bills (T-bills), including those for its benchmark 91-day T-bills which banks use to price their loans. Analysts said the fallout from the Supreme Court’s (SC) decision on the expanded value added tax (EVAT), considered to be the centerpiece of the government’s fiscal and economic agenda, cast a thick pall of gloom across all markets yesterday. The auction committee headed by the Bureau of Treasury (BTr) took 45 minutes to consider the bids for all tenors of T-bills but ultimately decided to reject across the board. National Treasurer Omar Cruz said finance officials would give the market one week to digest the recent developments, saying that "banks are still probably in shock. " "We did our best," Cruz said. "We looked at all the bids almost line by line. But for a market to be a market, the tenders have to be at least twice the offer." According to Cruz, tenders for any government issuance should normally be three times the offer if there is any real interest in the market. Interest rates on the benchmark notes would have averaged at least 6.171 percent, up 27 basis points from the previous week’s close. On the other hand, the rate would have gone up to an average of 7.512 percent and the rate on the one-year notes would have gone up to 8.595 percent. The Bureau of Treasury also rejected bids for the 182-day and 365-day bills. Banks and other investors submitted bids totaling P5.6 billion for the three securities. The government had planned to sell P6 billion in total. Cruz said the bid application was very thin, even smaller than the offer in the 182-day and 365-day notes. |
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