By MAX ESTAYO

The Bureau of Treasury said yesterday it may stop selling treasury-bills next year as these papers have become "illiquid."

The yield on the t-bills rose yesterday, with market appetite strong for the 3-month but uninterested with the one-year paper.

The treasury only accepted bids for the 91-day and 182-day, rejecting bids for 364-day, which banks attempted to buy at "throw-away" prices.

National Treasury Omar Cruz said "sometime" next year, the government may sell only t-bonds, with the off-the-run two-year bonds to take the place of the t-bills.

"The t-bill market, unlike the t-bond, is illiquid. They don’t buy unless there are client requirements. T-bills have become extinct, illiquid kind of instrumentation," Cruz said.

"Soon, all the off-the-run t-bonds will take care of the lower end. They become natural benchmarks for short-term tenors," he added.

Cruz earlier said the t-bills have ceased to be benchmarks. The rates have fallen too low for banks to ever consider buying them.

Off-the-run bonds are floats nearing their maturities. Bonds, like the 2-year, can easily replace the t-bills, Cruz said, because they have the volume to be called benchmarks.

"There will be no need for t-bills because there will be enough supply of short-end bonds," Cruz said

Cruz said the decision to scrap t-bill sales will be done "in coordination with the market."

At the auction yesterday, the yield on the 3-month was up by 6.3 basis points to 2.998 percent from 2.935 percent during the March 5 auction.

The treasury sold P700 million, P200 million more than the program, out of P2.87 billion total bids.

Meanwhile, the yield on the 6-month was up by 6.7 basis points to 3.462 percent from 3.395 percent during the Feb. 19 auction. The treasury sold the programmed P1.5 billion on total bids of P5.56 billion.

The treasury rejected bids for the one-year paper, where banks offered to buy P3.34 billion of the P2-billion on offer.

The yield rose by 71 basis points to 4.532 percent from 3.82 percent during the February 19 auction.

The treasury had rejected bids for the 6-month and one-year during the March 5 auctions.

Cruz said the rates for the 3-month and 6-month yesterday reflected market values.

"Market interest and appetite were clearly on the short term. The bids that we accepted were very much within trading ranges. They came out much better than market expectations," Cruz said.

"But the bids for the one-year were throw-way bids. The market’s not trading with that range. We’re not in dire need of cash to accept the offer," he said.