BTr rejects all bids for T-bonds

The Bureau of the Treasury (BTr) yesterday rejected all bids for reissued 10-year Treasury bonds due to the spike in the rates asked by investors.

Had the auction committee decided to fully award the P15 billion offering, the interest rate for the securities, with a remaining life span of nine years and six months, could have averaged 7.64 percent.

BTr data showed this is 129 basis points higher than the 6.35 percent average rate fetched by the same debt papers during the previous issuance.

This is likewise 16.86 basis points higher than the secondary market rate for the same securities, which settled at 7.4714 percent before the auction closed.

The auction was undersubscribed, with tenders reaching only P12.737 billion as against the P15 billion issuance volume.

In an interview, national deputy treasurer Erwin Sta. Ana said the auction committee decided to reject all tenders as the rates asked by

investors were higher than the BTr’s estimates and the secondary market.

“Bids came in much higher than what we have expected given our initial survey from the government securities eligible dealers and based on where this security is actually trading. Hence, the decision to fully reject,” Sta. Ana told reporters after the auction.

Sta. Ana said there was a jump in the rates asked by investors considering that the last issuance of 10-year bonds happened last May. Since then, many developments have already happened in the market.

“The last time we awarded for this security was May and reasonably, there are already several rate increases from the central bank in the past couple of weeks,” he said.

In addition, Sta. Ana said the market is expecting another rate hike this September following the higherthan-expected inflation outturn last August.