BTr rejects all bids for 7-year treasury bonds

The government on Tuesday rejected all tenders for the seven-year treasury bonds as investors avoided risks amid a gloomy global outlook.

National Treasurer Roberto B. Tan said in an interview that the auction results were not favorable despite promising news in the domestic front, such as a strong economic growth in the first quarter and a stable inflation outlook.

Statistics agencies have reported a 6.4-percent year-on-year increase in gross domestic product for January to March and the easing inflation that settled at 2.9 percent in May.

“The domestic market is risk-averse given the global developments,” Tan said. “The equities market is down globally, and one index even reached its lowest since 1983.”

The official was referring to Japan’s Topix or Tokyo stock price index, which analysts said fell to a 28-year low because of continuing debt woes in the eurozone and the disappointing economic data in the United States and China.

“The (investors) who have (submitted tenders) today are fence-sitting, just giving very protective rates,” Tan said. “I guess they are waiting for how the domestic market will react to global events.”

Monday’s offer of P9 billion was undersubscribed, with investors making available only P5.965 billion.

Had the Bureau of the Treasury (BTr) accepted all tenders, the yield would have risen by 33.5 basis points to 5.334 percent.

Tuesday’s offer was supposed to be a reissue of the debt paper that was floated on April 26, which meant it would have had six years and 10 months left before maturity.

In April, the government awarded only P3.7 billion of its P9 billion offer. Only tenders that were “reasonably” aligned with prevailing rates in the secondary market were accepted.

Also, Tuesday’s offer is the government’s third attempt in four months to sell seven-year bonds.

In late March, the auctioneers rejected all tenders for the seven-year debt paper as investors pushed for what the government found to be “unrealistic” rates.