Gov’t rejects all bids for five-year T-bonds

THE GOVERNMENT rejected all bids for the reissued fiveyear Treasury bonds (T-bonds) it offered on Tuesday as investors asked for higher rates even as inflation slowed sharply last month.

The Bureau of the Treasury (BTr) did not accept any tenders for its offer of P30 billion in reissued five-year bonds on Tuesday despite total demand reaching P53.426 billion, higher than the amount on the auction block.

Had the Treasury made a full award, the bonds, which have a remaining life of four years and 11 months, would have fetched an average rate of 6.219% as tendered yields ranged from 6.09% to 6.27%.

This average rate is 14.6 basis points (bps) higher than the 6.073% quoted for the papers when they were first offered on Jan. 9 and 9.4 bps above the 6.125% coupon fetched for the series.

It is also 13.3 bps above the 6.086% seen for the same bond series and 5.6 bps higher than the 6.163% quoted for the fiveyear bond at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The government did not award any five-year bonds due to higher bid yields compared with secondary market rates, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The flexibility to reject higher bid yields would have been due to the upcoming retail Treasury bond (RTB)... in view of P700billion RTBs maturing by early March 2024,” Mr. Ricafort said.

The BTr is looking to raise at least P30 billion from its offer of five-year retail Treasury bonds, which will also have an exchange component for holders of three- and five-year RTBs maturing next month, it announced on Tuesday.

The Treasury will hold a ratesetting auction for the retail bonds on Feb. 13, which will also be the start of the public offer period and submission of bond exchange offers. The offering is scheduled to end on Feb. 23, unless closed earlier by the Treasury.

The new retail bonds will be issued on Feb. 28. —