Investors flocked to this year’s last auction for government securities yesterday but the Bureau of the Treasury rejected all bids for the T-bonds it offered as rates rose ahead of the anticipated US Federal Reserve rate hike next week.
Tenders for the P25 billion worth of reissued five-year treasury bonds maturing on Aug. 20, 2020, reached P41.915 billion, but had the IOUs been fully awarded, the annual rate would have jumped by 39.8 basis points to 4.375 percent from 3.977 percent previously.
“The market is still quite unsettled because of what is being anticipated of the Fed,” National Treasurer Roberto B. Tan told reporters.
Tan nonetheless noted that the volume of bids for the T-bond offering was “quite meaningful” as it was almost fully covered in terms of the tenders.
“But the rates that were being bid out were quite far from the market rates. So we decided to just reject. We would have accommodated following the direction but this might send the wrong signal,” Tan said.
By the time the Treasury resumes domestic borrowings through the issuance of T-bills and T-bonds early next year, Tan expressed optimism that market uncertainty would have been reduced drastically following the expected Fed rate hike.
Also, Tan confirmed the Inquirer’s earlier report that the Monetary Board, the Bangko Sentral ng Pilipinas’ highest policymaking body, had already approved the planned global bond sale for next year.
In a separate investor conference call, Deputy National Treasurer Erwin D. Sta. Ana said the Philippine government was “monitoring very closely market developments offshore and putting ourselves in a position to pursue the transaction when we see we can successfully return to capital market.”