High rates force BTr to reject bids for T-bonds
Asked for comment, National Treasurer Rosalia de Leon told reporters the high rates asked by government securities eligible dealers may be attributed to the recent decision of the US Fed to hike its interest rates. File
MANILA, Philippines — The Bureau of the Treasury (BTr) rejected yesterday all bids for reissued five-year Treasury-bonds as traders asked for high rates following the US Federal Reserve’s move to hike interest rates.
During yesterday’s auction, the BTr fully rejected all tenders for reissued T-bonds with remaining life span of four years and one month.
Tenders amounted to P10.09 billion, only half the P20 billion original offering.
If the Treasury had awarded all bids, the average rates of the securities could have jumped 70.2 basis points to 4.681 percent from 3.979 percent recorded the previous auction last October.
The rate was also slightly higher than the secondary market rates for the same securities, which settled at 4.81 percent before the auction closed in the afternoon.
Asked for comment, National Treasurer Rosalia de Leon told reporters the high rates asked by government securities eligible dealers may be attributed to the recent decision of the US Fed to hike its interest rates.
She said the result of yesterday’s auction reflects the tight liquidity in the market.
“You can see the rates, and I guess there’s very tight liquidity because we’ve seen the undersubscription. The banks again see we are not in need of cash after the good harvest from the RTB (retail Treasury bonds),” De Leon said.
The Treasury raised P255 billion from the sale of RTBs last month, putting the national government in good cash position. De Leon earlier said the fresh funds would be used for the government’s programs in 2018.
“They also may not be in the mood anyway because they are also already closing the books,” she said.
Going forward, De Leon said the government is looking at retaining the volume of securities it would offer at P20 billion.
“We are looking at that volume, yes. But the issuance program should be coming before the end of the year,” she said.
According to De Leon, the BTr has committed to announce the tenors of government debt papers every six months, and the volume of the securities, every quarter.
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