Rate spike disregards T-bond bids
Such sanction will increase the number of the unemployed among our countrymen at the time when they most need jobs
The ultra-high rate witnessed in the Bureau of Treasury’s (BTr) reissued 10-year Treasury bond prompted a full rejection from the agency, despite strong market demand.
“(Investor) appetite remains on the immediate part of the curve (as they) see policy rates will remain steady for the rest of the year,” National Treasurer Rosalia de Leon said.
Should be awarded in full, the 10-year IOU will fetch an average rate of 3.329 percent, a 60.5 basis point increase from the reissued 10-year T-bond in August 2020.
“Nevertheless, the auction was oversubscribed with total bids reaching P44.5 billion, more than 1.4 times the P30 billion offering,” the BTr said.
The Treasury chief earlier said that ample liquidity remains in the financial system following the Bangko Sentral ng Pilipinas’ (BSP) salvo of easing measures including the reduction on both its key interest and reserve requirement (RR) levels.
As such, investors continue to flock towards the BTr’s security issuances given its low-risk nature amid market uncertainty due to the health crisis.
To recall, the BSP launched its own securities last week, which received an oversubscription of 2.2 times the original volume coupled with a low rate, hence, the decision to award the IOU in full.
AMPLE liquidity remains in the financial system following the Bangko Sentral ng Pilipinas’ salvo of easing measures including the reduction on both its key interest and reserve requirement levels.