The government on Tuesday rejected all tenders for the seven-year treasury bond as investors pushed for “unrealistic” rates.
National Treasurer Roberto B. Tan said in an interview that market players were apparently speculating about a dearth of government cash following the rise in interest rates last week.
“There was some nervousness in the market last week (amid) some sort of a sell-off (and) yields increases, so they’re waiting for the results,” Tan said.
“Some are speculating that the Treasury is in need of funds, but that’s far from the truth (because) we just raised a lot of funds from the retail T-bond (RTB) issue,” he added.
Last month, the government was able to raise a total of P179.8 billion from the sale of 15-year and 20-year RTBs.
Of the total amount raised, P44.14 billion was from 15-year paper and P135.66 billion was from 20-year bonds.
On Tuesday, the Bureau of the Treasury offered P9 billion in new seven-year bonds, while the amount tendered reached P12.16 billion.
Had the BTr awarded fully its offered volume, the T-bond would have fetched a coupon of 5.25 percent, which is 74.6 basis points higher than the 4.504-percent average set in the last auction for debt paper of the same tenor that was conducted in February.
This is also 65 basis points higher than the 4.6 percent yield on corresponding done deals in the secondary market.
Tan described most of the bids put forward Tuesday as “unrealistic,” noting that only the lowest bids, in terms of yield, were near the prevailing secondary market rate.
“We decided to just reject (all tenders) to send the signal that if there’s any speculation that we (are short of cash), that’s not correct,” he added.