“Unreasonably high” bid rates forced the Bureau of the Treasury to reject all bids for the reissued seven-year treasury bonds it offered Tuesday.
Had the Treasury fully awarded the P15 billion in debt paper with a remaining maturity of six years and five months, the annual rate would have jumped to an average of 8.284 percent from 7.085 percent during the previous auction in September.
Last month, the Treasury capped the yield and partially awarded only P5.73 billion for the same securities as the rate would have risen to 7.604 percent if a full award had been made.
The IOUs had a coupon rate of 5.75 percent when it was first offered last April.
Tenders on Tuesday nonetheless reached P24.456 billion, making the auction oversubscribed.
“For the committee, the bids came in unreasonably high. We looked at the last time we issued this security and the five-year [treasury bonds]—there’s really a huge pickup from last auction’s rates. So the committee decided to reject at this time,” Deputy Treasurer Erwin D. Sta. Ana told reporters after the auction.
As for the strong demand, Sta. Ana explained: “It’s already an interesting proposition to go back to government securities because of the increasing rates, and that has been one of the feedback we’ve received, so you know that’s why they are coming in now.”
With the full rejection during its fourth reissuance, the outstanding amount for this treasury bond series stayed at P26.2 billion. —BEN O. DE VERA