NG rejects all bids for bonds on high bids

THE national government fully rejected bids for its reissued 20-year Treasury bond (Tbond) on Tuesday’s auction as higher bid yields could increase the government’s borrowing costs.

The Bureau of the Treasury (BTR) made a full rejection of the 20-year T-bonds worth P30 billion with a remaining term of 14 years and nine months in an auction.

The average rate for the reissued Tbonds would have been 6.987 percent had the committee approved the bids. Meanwhile, the comparable 15-year PHP BVAL yield is at 6.77 percent as of April 15.

The total bids amounted to P37.555 billion, slightly higher compared to the P37.360 billion in the previous T-bond auction on April 8 this year, which saw mixed results.

The Treasury said the total outstanding volume for the series currently stands at P103.8 billion.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort attributed the auction committee’s full rejection of all the bids to higher bid yields due to geopolitical risks.

Ricafort said the response of top Israeli officials to Iran’s drone and missile attacks over the weekend could prompt the bid yields to increase.

The RCBC executive added the latest hawkish local signals that would delay any local policy rate cut to the first quarter in 2025 and tight monetary policy that would remain for the meantime are added factors to higher bid yields.

Last week, the Treasury partially awarded the reissued 10-year Tbonds raising P20.6 billion but fell short by P9.6 billion out of the P30 billion offering.

The average rates for the government security, with a remaining term of nine years and nine months, settled at 6.439 percent, with bids ranging from 6.365 percent to 6.480 percent.

For April, the national government plans to borrow as much as P120 billion from the tender of T-bonds, the same as the targeted amount last month. The Treasury is scheduled to hold four auctions of Tbonds with varying tenors to raise as much as P30 billion each.

The state is also targeting to raise P195 billion in April from the combined sale of T-bonds and Treasury bills (T-bills).

The government also aims to borrow, following a 75:25 mix in favor of domestic sources, a total of P1.853 trillion from the domestic market through the sale of T-bills and Tbonds, based on state budget documents.