Government rejects bids for T-bonds

MANILA, Philippines — The government rejected yesterday all bids for the seven-year Treasury bonds (T-bonds), as rates continued to exceed market expectations, according to the Bureau of the Treasury (BTr).

Investors also appeared cautious, submitting bids worth only P36.306 billion, slightly above the P35 billion on offer.

Yesterday’s auction also marked the second straight week that the Treasury rejected all bids for T-bonds. The agency has yet to fetch any amount to fill in the P250-billion borrowing program it set for March.

National Treasurer Rosalia de Leon said investors are concerned about inflation, which could soon spiral due to the weekly increases in fuel costs.

De Leon said the debt market expects the US Fed to raise interest rates next week in an effort to push borrowing rates up and reduce consumer demand to tame inflation.

“Not much demand with amount tendered just more than P1 billion in excess of offer for the new seven-year T-bonds,” De Leon said in a text message to reporters.

“Markets are still roiled by rising inflation fears due to the surge in oil and commodity prices. The verdict in Fed rate hike is also awaited,” she said.

The   Federal Open Market Committee will convene on March 15 to 16 to discuss how much of a rate hike will be made to hold off US inflation. US inflation rose to a 40-year high of 7.5 percent in January, compelling Washington to take action on the monetary side.

Despite the failed bidding, De Leon said the Treasury maintains a cash position strong enough to fund government operations, thanks to the P458-billion proceeds raised from the 27th tranche of retail Treasury bonds.