BTr re­jects bids for 7-year T-bond

Sun.Star Davao - - BUSINESS -

MANILA -- The Bureau of the Trea­sury’s (BTr) auc­tion com­mit­tee re­jected all bids for the seven-year Trea­sury bond Tues­day due to lower de­mand as banks asked for high yields.

BTr of­fered the debt pa­per for P20 bil­lion but ten­ders only reached P4.39 bil­lion.

Na­tional Trea­surer Ros­alia De Leon told re­porters af­ter the auc­tion that there was no rea­son for the Com­mit­tee to ac­cept the bids af­ter rates rose to above 4.75 per­cent (%), higher than the 4.625% fetched by the re­cent Re­tail Trea­sury Bond (RTB) is­suance of the gov­ern­ment.

The gov­ern­ment on Mon­day is­sued a to­tal of P255.4 bil­lion-worth of RTBs, higher than the ini­tial of­fer­ing of P30 bil­lion.

BTr also re­jected bids at high rates be­cause of in­fla­tion ex­pec­ta­tions. The Bangko Sentral ng Pilip­inas (BSP) fore­cast an av­er­age of 3.2% in­fla­tion this year.

Last Novem­ber, in­fla­tion slowed down to 3.3% from month-ago’s 3.5%, re­sult­ing an av­er­age of 3.2% to date, within the gov­ern­ment’s two to four per­cent tar­get for 2017-2019.

“And then at the same time BSP also re­duced the vol­ume for the 28 TDF (Term De­posit Fa­cil­ity) to P40 (from P90 bil­lion of­fer­ing pre­vi­ously) so there would still be ad­di­tional liq­uid­ity to be used by the fi­nan­cial sys­tem,” she said.

De Leon at­trib­uted banks’ de­ci­sion to ask for high rates to ex­pec­ta­tions of higher rates in the US, with the Fed­eral Re­serve pro­jected to hike rates dur­ing the meet­ing of the Fed­eral Open Mar­ket Com­mit­tee (FOMC) on De­cem­ber 12 to 13, 2017.

De Leon said auc­tions of gov­ern­ment se­cu­ri­ties (GS) would con­tinue un­til De­cem­ber 19 even af­ter the RTB is­suance, point­ing out that it was clearly men­tioned to the banks that pro­ceeds of the RTB is part of the gov­ern­ment’s fund­ing for 2018.

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