T-bonds partially awarded due to high bid rates

The Bureau of the Treasury on Tuesday sold only more than half of its bonds offering as last month’s higher inflation and escalating US-Iran tensions pushed many investors to the sidelines.

The Treasury awarded P16.59 billion of the P30 billion worth of reissued three-year bonds maturing on July 4, 2022.

The annual rate was capped at an average of 4.014 percent as bid rates reached a high of 4.05 percent and a low of 3.985 percent.

Tenders reached P37.35 billion, making the auction oversubscribed.

To date, the Treasury sold P103.63 billion of this bond series.

Deputy Treasurer Erwin D. Sta. Ana told reporters after the auction that the market was reacting to news that headline inflation picked up to 2.5 percent year-on-year in December on top of developing geopolitical tensions in the Middle East.

“We feel that the market is on wait-and-see at this time, hence the turnout this afternoon,” Sta. Ana said.

He said the market was still digesting the higher-than-expected December inflation print, hence held off from bidding aggressively.

As far as geopolitical tensions were concerned, Sta. Ana noted that these had historically resulted in risk-off attitude among investors in government securities, especially if oil supply and prices were to be affected.

During last Monday’s T-bills auction, the Treasury also partially awarded the short-dated debt paper as rates of the 182- and 364-day bills rose. —BEN O. DE VERA