BTr rejects all bids for reissued T-bonds

MANILA, Philippines — The Bureau of the Treasury (BTr) yesterday rejected all bids for reissued seven-year Treasury bonds (T-bonds) as yields rose ahead of US Federal Reserve chairman Jerome Powell’s Congressional testimony.

Submitted bids for the bonds—with remaining maturity of six years and eight months—averaged 6.621 percent, 64.5 basis points higher than the 5.976 percent fetched by the securities in its previous reissuance.

This is also 25.85 basis points above the secondary market rate for the same securities, which settled at 6.3625 percent before the auction closed.

As a result, the auction committee decided to reject all bids for the debt papers.

The auction was undersubscribed, garnering only P13.965 billion in bids, below the P15 billion original offering volume.

According to National Treasurer Rosalia de Leon, the auction committee decided to reject bids as the price asked by investors were too high.

“It’s really outrageous pricing that they’re offering to us. And it’s undersubscribed, P13 billion only. So most of those are really throw-away bids,” De Leon told reporters after the auction.

De Leon said the auction results also reflect the market’s continued preference for the shorter end of the curve, especially as they wait for the next actions of the Bangko Sentral ng Pilipinas (BSP) and the speech of the US Fed chief.

“It’s wait-and-see for the Aug. 9 policy meeting, and of course, everybody’s waiting for Powell’s testimony tonight, what would be the move of the Fed,” the official said.

“It’s a wait-and-see (environment) so nobody would want to also be locked in already in seven years, in the intermediate part of the curve,” she added.

As a result of the rejection, the BTr said the total outstanding securities for this seven-year series remain at P20.5 billion.

Data from the BTr showed that outstanding T-bonds issued by the national government as of end-June settled at P4.197 trillion, of which P617.20 billion are seven-year debt papers.