Gov’t rejects tenders for 15-year T-bonds

MANILA  -The national government rejected tenders for P30-billion worth of 15-year Treasury bonds amid weak appetite, with tenders totaling at only P35.3 billion, that is pushing yields higher than secondary market rates.

The auction committee led by the Bureau of the Treasury said the average rate for the reissued T-bonds would have reached 6.927 percent had the offer been awarded. This average would have been 4.4 basis points (bps) lower than the 6.971-percent average set in the previous auction made last July.

Originally issued as 20-year T-bonds in January 2019, the reissue has a remaining life of 15 years and five months, and carries a coupon rate of 6.75 percent.

Still, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the resulting average — if the offer were awarded — was “much higher (compared to) the comparable 15-year PHP BVAL yield at 6.63 percent as of Aug. 22.”

At the Bloomberg Valuation Service, corresponding corporate bonds were fetching 6.627 percent while similar government securities were yielding 6.628 percent. If the committee made a full award, the average rate would be 29.9 to 30 basis points higher.

Ricafort said investors were pushing for higher yields in the wake of recent signals from the Bangko Sentral ng Pilipinas about a “hawkish pause,” which showed their readiness to resume hiking interest rates, if needed.

Philippine monetary authorities “also signaled no rate cut for now as inflation is not yet within the BSP’s target range, but signaled the possibility of a further cut in banks’ reserve requirements later this year,” the economist said.

READ: BSP ready to hike rates during ‘hawkish pause’