Finding yield demand too high, Treasury rejects all bids for T-bonds

The Bureau of the Treasury rejected bids for the reissued seven-year T-bonds offered yesterday as investors were tepid a day after the settlement of a record-high volume of retail treasury bonds.

Tenders for the IOUs maturing on Aug. 20, 2024 reached merely P4.39 billion for the P20-billion offering, with submitted bids averaging 5.009 percent or 61.9-basis points higher than the liquid benchmark, the Treasury said in a statement.

National Treasurer Rosalia V. de Leon told reporters after the auction that there was no reason for the “very big increase” in rates sought by the market given expectations of manageable inflation and the additional liquidity in the system after the Bangko Sentral ng Pilipinas reduced the volume of its term deposit facility.

However, De Leon noted that the market also sought a higher rate due to external developments, including the imminent US Federal Reserve rate hike expected before year-end and the approval of the US tax plan by the US Senate.

“I think they also knew that the Treasury is in very much solid financing ground because of the P255.4-billion RTBs that we were able to generate,” De Leon added.

Despite the full rejection of treasury bonds, De Leon said the government still had a “very much comfortable” cash buffer.