The government rejected banks’ bids for treasury bills for the fourth straight time yesterday as banks asked for rates above five percent for all three tenors.

The Bureau of Treasury had expected to make a sale following the central bank’s decision last week to remove some of its special deposit accounts and reduce the yield on the remaining tenors.

The banks’ bids totaled just P2.54 billion or more than a third of the P6.5 billion that the treasury had intended to raise this week, proof that investors were still unwilling to park their funds in the short-term debts.

Banks offered an average of 5.026 percent for the 91-day, 5.543 percent for 182-day and 5.895 percent for 364-day, which the auction committee rejected outright.

The rates were at 3.673 percent and 4.675 percent for the three-month and six-month debts, respectively when they were last sold on Jan. 21. The one-year paper fetched a rate of 5.266 percent on Feb. 4.

The bids amounted to P510 million for 91-day, P910 million for 182-day and P1.11 billion for 364-day, which were all below the offers of P1.5 billion, P2 billion and P3 billion, respectively.

Finance undersecretary and acting national treasurer Roberto Tan blamed the US financial turmoil as behind the refusal of investors to buy the short-term papers.

"The market is just fence-sitting because of the many adverse developments in the US. The market is very risk averse, traders don’t want to make a mistake and bet on something that may be overtaken by events," Tan said.

Tan said the long Lenten break ahead is also contributing to the sober market atmosphere.

The government had failed to sell treasury bills in the last four auctions, only managing to sell the one-year debt during the Feb. 4 auction.

It also rejected bids for treasury bonds in the last two auctions.

The Bangko Sentral ng Pilipinas last week closed the 2-, 3- and 6-month SDAs in an apparent move to kill competition to the T-bills. The windows fetched rates of 5.25-5.5 percent.

It retained the 1- and 2-week and 1-month SDAs but the rates were cut to 5.0625 percent, 5.125 percent and 5.1875 percent from higher levels.

Tan said the treasury is definitely using the negotiated sales to raise funds for the government from the domestic market.

He said, however, the treasury will first come up with guidelines to ensure the deals are done in a transparent manner to comply with government rules.