Treasury finds offered rates too high, rejects all bids for 11-year bonds

The Bureau of the Treasury on Tuesday rejected all bids for the reissued 11-year bonds it offered, as yields rose in view of the looming tapering by the US Federal Reserve.

Despite strong demand for the bonds maturing in March 2033, which attracted P46.1 billion in bids, the Treasury declined to award its P35-billion offering.

Had the Treasury decided to sell the bonds, the average annual rate would have risen to 4.533 percent as bid rates hit a high of 5.1 percent and a low of 4.25 percent.
National Treasurer Rosalia de Leon said investors’ rates were “unreasonably way above secondary levels.”

“Markets are pricing in the possible start of tapering in the [United States] following [the release of] Fed minutes,” De Leon said.

Minutes from the US Fed’s July meeting released last week showed that the United States monetary authorities might start winding down purchases of assets like bonds before year-end.

In contrast, the Treasury on Monday fully awarded P15 billion in short-dated T-bills given a “well-participated” auction amid flushing liquidity, De Leon said.

As scheduled, the Treasury sold P5 billion each in the benchmark 91-, 182-, and 364-day debt paper as Monday’s auction was thrice oversubscribed with tenders totaling P50.9 billion across the three tenors.

The average rates for the three- and six-month IOUs inched up to 1.077 percent and 1.408 percent, respectively, from 1.066 percent and 1.407 percent last week.

On the other hand, the one-year securities fetched an annual rate of 1.612 percent, down from 1.617 percent previously.

The Treasury said all T-bill yields remained below secondary market levels. —Ben O. de Vera INQ