MANILA (Thomson Financial) - The Philippine government will stop offering
91-day and 182-day Treasury bills at fortnightly auctions in the second quarter,
but will double its offer of one-year bills from the current size of 3 billion
pesos per auction.
Based on its quarterly borrowing program released on Monday, the government
said it was planning domestic borrowings of 84 billion pesos for the second
quarter, half of which will come from one-year bills while the other half will
come from Treasury bonds with tenors of three, four, five, seven, 10 and 20
years.
The government failed to raise the said amount in the first quarter after a
series of rejections of bids for T-bills at its regular auctions. Last Monday,
the Bureau of Treasury rejected all bids for T-bills for the third straight
auction, given lean volumes and high rates offered by the market.
Demand for short-term government securities has waned with banks -- the main
market for these instruments -- having been lured to park their funds at the
central bank's special deposit account (SDA) windows which offer higher yields.
Due to rising inflation, the central bank last March 13 decided to keep its
key interest rates steady at 5.0 percent for borrowing and 7.0 percent for
lending, after a series of rate cuts since last year.
But policymakers introduced some changes to the terms of the SDA facility,
access to which had been widened by the central bank from May last year to
include banks' trust departments and government financial institutions.
The SDA facility has served as a tool to mop up excess liquidity in the
banking system amid surging foreign exchange inflows.
In a move it said was meant to boost bank lending, the central bank shut
down the SDA windows for two, three- and six-month placements and reduced
interest rates on the remaining shorter tenors.
(1 US dollar = 41.68 pesos)
enrico.delacruz@thomson.com
ed/zr/zr
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