MANILA, Philippines — The government turned down all bids for the P20 billion worth of reissued 10-year Treasury bonds yesterday as investors asked for higher than expected rates.
The Bureau of the Treasury said it rejected all bids for the T-bonds with a remaining term of nine years and seven months, as investors demanded yields that breached what was expected for the debt papers.
The auction was more than twice oversubscribed as total tenders reached P42.437 billion.
Yield for the T-bonds averaged 5.071 percent, and even went up as high as 5.123 percent, surpassing by 7.3 basis points the BVAL Reference of 4.998 percent for the tenor.
The Treasury said it expected the yield to hit as high as 5.13 percent, the rate secured by the T-bonds in its last offering in November, had it been sold at a volume of P35 billion. The agency slashed the amount of borrowings for December to keep the country’s debt pile within sustainable levels.
National Treasurer Rosalia de Leon said investors have yet to be convinced that inflation would no longer pose a risk on the economy like in the previous months.
Inflation or the general increase in commodity prices even subsided for a third straight month to 4.2 percent in November from 4.6 percent in October, although average inflation for the year stands at 4.5 percent or well above the government’s target range of two to four percent.
“Full rejection as bids are still high (even though) inflation has decelerated for third consecutive month and Gov (Benjamin Diokno) has consistently expressed accommodative stance to stay in support of recovery,” De Leon said.