PH reviewing size, schedule of local debt auctions

by Karen Lema, Reuters

Posted at Dec 10 2012 04:18 PM | Updated as of Dec 11 2012 12:18 AM

MANILA - The Philippines is studying if it can increase the size of treasury bills and bonds on offer per auction but reduce the frequency of tenders due to ample liquidity in the financial system, a senior official said on Monday. 

The Bureau of Treasury holds treasury bill and bond auctions alternately every other week, with an issue size of P7.5 billion ($183.17 million) and P9 billion, respectively. 

"We might increase the volume but with less frequency," Deputy Treasurer Eduardo Mendiola told reporters, referring to the size and schedule of auctions of bills and bonds. 

The plan is being studied carefully to see how it will affect local interest rates. 

Money parked with the central bank's special deposit account window, an indicator of domestic liquidity, totalled P1.7 trillion ($41 billion) in the week ending Nov. 16, down from a record of more than $1.8 trillion. 

Yields on 91-day, 182-day and 364-day treasury bills have been less than 1 percent for sometime, while those on longer-dated bonds have also stayed at relatively low levels thanks to benign inflation. 

With inflation not a concern, the central bank brought down its key policy rate by a total 100 basis points so far this year to a record low of 3.5 percent to help shield the economy from the global downturn. 

A Reuters poll on Monday showed the central bank is widely expected to leave the overnight borrowing rate on hold at 3.5 percent on Thursday and keep it there through at least the early part of 2012.  The central bank forecast inflation will average below the lower half of its 3 to 5 percent target range for 2012 and 2013.