BTr rejects bids for 7-year T-bond
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.