The government on Tuesday rejected all bids for the 5-year treasury bonds during the last auction for its debt securities for 2013.
Deputy National Treasurer Eduardo Mendiola said the move was prompted by the absurdly high bids sought by the market.
Mendiola said the rates asked by majority of the bidders were higher than the existing rate in the secondary market at 2.8 percent.
Had the Bureau of the Treasury’s auction committee accepted the bids, the rate for the 5-year bonds would hit as high as 2.997 percent.
That rate, however, would have still been lower than the 3.002 percent recorded in the previous auction.
“We cannot accept rates higher than the secondary market. There is no reason why the government should pay more than the secondary market rate,” Mendiola told reporters after the auction.
Under its borrowing schedule, the government was supposed to have raised P30 billion from Tuesday’s auction.
Total bids reached P46.46 billion.
Although the government needs to meet huge expenditure requirements for postcalamity rehabilitation and reconstruction of several areas in the Visayas, Mendiola said there were sufficient funds to cover for those needs.
He said the government could use savings, realign funds from less important projects and tap official development assistance (ODAs) from international lenders.
The Philippines has received offers of cheap loans from lenders like the World Bank and the Asian Development Bank in the wake of Supertyphoon Yolanda, which hit Central, Eastern and Western Visayas the hardest.
Immediate relief and recovery measures were estimated to cost P38.8 billion.
The amount will cover reconstruction of shelter, public offices and government hospitals as well as the cash-for-work program for victims who are able to work. Under the cash-for-work program, people from affected areas will be employed in reconstruction activities.
Mendiola said there were sufficient funds that the government could tap and that it did not have to accept “unreasonably” high interest rates just to raise cash.