Government rejects bids for P35 billion T-bonds

Elijah Felice Rosales – The Philippine Star

January 5, 2022 | 12:00am

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MANILA, Philippines — The government rejected all bids for reissued seven-year Treasury bonds (T-bonds) as investors asked for rates beyond market pricing despite the declining inflation and sustained economic growth.

The Bureau of the Treasury (BTr) yesterday turned down all bids for reissued seven-year T-bonds worth P35 billion.

Demand for the T-bonds amounted to P41.42 billion, oversubscribing the sale by 1.18 times.

However, the yields for the reissued debt papers averaged 4.814 percent, 14.2 basis points above the BVAL Reference Rate of 4.672 percent. Further, some investors even asked rates as high as 5.2 percent, pushing the Treasury to decline all tenders for its first offering of T-bonds this year.

In its last auction for 2021, the Treasury in December rejected all bids for the same T-bonds with a remaining life of six years and seven months. For a third consecutive offering, the agency has dismissed all tenders filed for the long-term securities.

National Treasurer Rosalia de Leon said investors should, by now, be bidding yields within the market prices given that December inflation is expected to settle within government target and the Bangko Sentral ng Pilipinas (BSP) has yet to signal a rate hike.

“Full rejection as rates are unreasonably high with expectations for inflation to trend downward and BSP remains committed to support economic recovery,” De Leon told reporters.

She said the market may have demanded increased rates as they await the results of the December inflation, which the BSP projects to hover at 3.9 percent.

In spite of the rejection, De Leon vowed that the government has the resources to bankroll all of its programs and projects for the year. She said the Treasury ended 2021 with a cash surplus due to the disbursement of official development assistance and collection of additional revenues.

“Even with rejection, cash balance remains comfortable to meet requirements. We ended 2021 with strong revenue collections and ODA disbursement even after rejection of remaining bond auctions last year,” De Leon said.

The government plans to borrow P200 billion from the domestic market in January through the sale of P140 billion in T-bonds and P60 billion in T- bills.



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