The Bureau of the Treasury awarded only P16.22 billion of the P25 billion worth of reissued T-bonds offered on Monday, as higher bid rates due mainly to external uncertainties pushed the yield upward.
The Treasury accepted bids at an average rate of 3.169 percent, 8 basis points higher than the previous auction’s 3.089 percent, for the five-year treasury bonds. The bonds have remaining life of two years and seven months.
Total tenders hit P36.17 billion. The Treasury rejected a bigger portion or P19.95 billion of the tendered amount for the T-bonds maturing on May 23, 2018.
National Treasurer Roberto B. Tan told reporters after the auction that the Treasury accepted bids at the said rate which was at the upper end of its internal guideline.
“Based on our examination of this bond, it was trading consistently. But the market was still uncertain about the future,” Tan said, citing jitters brought about by speculations that the US Federal Reserve would likely hike rates in December.
“The market still wants to play on the safe side of the price range,” he added.
Only when the market is less volatile and “advantageous or reasonable” would the government consider conducting another round of offshore borrowing or domestic liability management, Tan said.
“We are giving ourselves an opportunistic stance. If there’s a window with good opportunity we’ll consider it. Right now we have no plan but we monitor the market closely,” he said.
The government is considering borrowing $750 million offshore next year to account for 15 percent of total borrowings for 2016.
In the fourth quarter, the government will borrow a total of P135 billion from domestic sources through the issuance of treasury bills and bonds.
In January, the government borrowed offshore through the sale of $2 billion worth of 25-year bonds at a record-low coupon of 3.95 percent.
Of the proceeds of this global bond issuance, the larger chunk of $1.5 billion was used to swap and retire old debt paper previously issued at higher rates and maturing between next year and 2034, while $500 million will be infused into the budget.
In September, the government swapped P237 billion in illiquid state IOUs with new benchmark bonds due 2025 and 2040. The domestic debt swap was launched last August to inject more liquidity into the market amid external volatility.