BTr rejects bids for 20-year bonds

MANILA, Philippines — The Bureau of the Treasury (BTr) yesterday rejected all bids for the 20-year Treasury bonds as investors sought higher rates amid uncertainties in the fuel market, as well as the recent interest rate cut made by the US Federal Reserve.

Had the auction committee decided to fully award the P20 billion offering, the Treasury bonds would have fetched an average rate of 5.356 percent, 34.1 basis points higher than the 5.015 percent recorded in the previous auction.

This was likewise higher than the secondary market rates for the same securities, which settled at 5.181 percent yesterday.

Total tenders reached P30.72 billion, about 1.5 times higher than the offer size.

“Bids came in higher than secondary market levels and even in the last auction. We feel that given the inflation path and the actions from the Bangko Sentral ng Pilipinas (BSP), the rates should not be heading where it is based on the bids,” Deputy Treasurer Erwin Sta. Ana said after the auction.

According to Sta. Ana, investors may be asking for higher rates due to concerns brought about by continuing geopolitical tensions, as well as the developments in the oil market following the attack on Saudi Arabia’s oil facilities.

He said they also considered the US Fed’s decision to cut interest rates last week.

“Given that, there could be a possibility that dealers would think they cannot park funds in long tenors securities. But we feel that oil prices is actually not a concern for now as the governor mentioned earlier. And there is a policy meeting wherein there is a possible rate cut as what has been circulating so we don’t see the oil issue as a catalyst for rising interest rates,” Sta. Ana said.