BTr rejects bids for 10-year T-bonds

MANILA, Philippines — The Bureau of the Treasury (BTr) rejected yesterday all bids for fresh 10-year Treasury bonds (T-bonds) amid high rates and tight liquidity in the market.

During yesterday’s auction, the Treasury rejected all P18.68 billion in bids for the newly issued 10-year T-bonds.

The demand fell slightly short of the P20 billion original offering, signaling weak appetite for long-term securities, the Treasury said.

National Treasurer Rosalia De Leon attributed the weak demand for long term securities to expectations of rate increases both by the US Federal Reserve and the Bangko Sentral ng Pilipinas, as well as fears of overheating of the economy.

“There are also expectations about inflation because of the implementation of the tax reform,” she said.

Had the BTr accepted the bids, the average rate for the debt papers could have jumped 54.6 basis points to 5.461 percent from 4.915 percent in the previous auction.

This was, however, lower than the secondary market rates for the same securities, which settled at 5.6838 percent before the auction closed in the afternoon.

De Leon said the Treasury expects better results in the upcoming auctions of the government as it readies the formal rollout of its Enhanced Government Securities Eligible Dealers Program in February.

“Once we have already put the market maker program formally in place, then we hope that there would be more reasonable (rates),” she said.

De Leon said the BTr is discussing the obligations of its 10 market makers, as well as their privileges, which include the access to the bond sinking fund.

The banks that made it into the BTr’s Market Maker program are the BDO Unibank Inc., Bank of the Philippine Islands, China Banking Corp., Citibank Philippines, Development Bank of the Philippines, First Metro Investment Corp., Land Bank of the Philippines, Metrobank and Trust Co., Rizal Commercial Banking Corp. and Security Bank.

Earlier, the BTr announced the government is planning to offer P120 billion in Treasury-bills and P120 billion in Treasury-bonds in the first three months.