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Government Rejects All Bids in Treasury Bills Auction

The Bureau of the Treasury (BTr) has rejected all bids in its Treasury bills (T-bills) auction on Monday with P20 billion on offer, on the back of anticipation for rate hikes from the Federal Reserve System (the Fed).

National Treasurer Rosalia V. de Leon said the auction committee saw spikes in bids for the government security that were deemed unreasonable.

The high bid rates for the set of T-bills on auction reportedly stemmed from expectations of a Fed rate hike this year.

“In terms of the increase, it’s not reasonable to have such very big spikes in the bids that were offered today. Of course, understandably, because of the imminent Fed rate hikes and coming out with very hawkish statements of the Fed governor of late, and also for the January Fed minutes,” de Leon told financial reporters.

For the 91-day tenor, had the BTr accepted all P9 billion on offer, an annual average rate of 2.98 percent would have been accepted for the IOUs, representing an increase of 31.9 basis points from the previous auction’s 2.67 percent.

The auction committee rejected tenders for the security amounting to P13.328 billion.

“We are also comparing this with our own expectations and it’s far beyond what we would have inputed in anticipation of today’s auction for all tenors,” she added.

The 182-day tenor received bids amounting to P3.810 billion, which was undersubscribed compared to the P6 billion on offer. Had the BTr accepted all bids, an annual average rate of 3.26 percent would have been set for the security, which is 41.1 basis points higher than the previous auction’s 2.85-percent rate.

For the 364-day tenor, bids only amounted to P4.190 billion from the P5 billion on offer. If the BTr auction committee had accepted the bids, an annual average rate of 3.42 percent would have been set for the security, increasing by 38.8 basis points from the previous auction’s 3.04 percent.

“Hopefully, once all these speculations fizzle out in March because of the Fed and the policy rate meetings, then everything would come down,” de Leon said.

Ref: https://businessmirror.com.ph/government-rejects-all-bids-in-treasury-bills-auction/

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