The government rejected bids for its long-term debt paper as investors sought a higher yield amid lingering inflation concerns and expectations the US Federal Reserve will soon hike interest rates.
National Treasurer Rosalia V. De Leon said the government could afford to reject high bids because strong cash position from the inflows of official development assistance.
De Leon also said the government is seeing improving revenue collection from the Bureau of Internal Revenue and Bureau of Customs as the economy further reopens.
At the Bureau of the Treasury auction on Tuesday, Oct. 19, investors had sought a return of 4.883 percent for the reissued six-year Treasury bonds, higher than the 3.185 percent seen in the previous auction.
Total bids amounted to P34.062 billion, lower than the P35 billion on offer.
"Inflation concerns linger and anticipated Fed action driven rates up,” de Leon said.
The treasurer, however, believes the rates being asked by investors were unreasonable given the central bank governor’s assurance that high inflation is only transitory.
De Leon also cited the Bangko Sentral ng Pilipinas’ pronouncement that raising interest too soon may do more harm than good. “This should assure the market.”