MANILA -- The Bureau of the Treasury (BTr) on Tuesday rejected all bids for the 20-year Treasury bond after investors asked for yields that are beyond the range projected by the auction committee.
Tenders surpassed the PHP15 billion offering after it reached PHP20.556 billion but Deputy Treasurer Erwin Sta. Ana said the bids are not enough for the auction committee to award since the rates demanded by investors are high.
He attributed the demand for high yields to expectations that the Monetary Board (MB) will hike central bank’s key rates even further when it holds its rate-setting meeting on August 9.
Another factor for demand for high rates is the high inflation environment, he said.
In the first half of this year, the rate of price increases averaged at 4.3 percent, higher than the government’s 2 to 4 percent.
Sta. Ana said that while monetary officials have repeatedly forecasted that inflation will peak in the third quarter, risks remained, which is why investors prefer short-term investments.
The rejection of the bids will not negatively impact on the government’s bid to ensure financing for its projects and programs, he said.
“We always monitor revenues and our collecting agencies are doing quite well so (to) some extent it eases out the burden from the debt side,” he said.
Sta. Ana said they will also adjust the government’s issuance program upon discussions with market participants to know about the possible demand for government securities.
With inflation projected to peak in the third quarter, the BTr official hopes for better auction results in the coming months. (PNA)
