Govt rejects bids for long-term IOUs

Published January 4, 2022, 2:54 PM

by Chino S. Leyco

The government rejected all bids for long-term debt papers as investors sought a higher yield.

At the Bureau of the Treasury’s auction on Tuesday, Jan. 4, investors had sought a return of 4.814 percent for the reissued seven-year Treasury bonds, higher than the previous yield of 4.468 percent granted last Oct. 26.

Total bids amounted to P41.42 billion.

“Full rejection as [interest] rates are unreasonably high with expectations for inflation to trend downward and the BSP [Bangko Sentral ng Pilipinas] remains committed to support economic recovery,” National Treasurer Rosalia V. De Leon told reporters.

De Leon said the government can also afford to reject high bids because its cash balance remains comfortable to meet spending requirements.

“We ended 2021 with strong revenue collections and ODA [official development assistance] disbursement even after rejection of remaining bond auctions last year,” she said.

Asked about the possible reasons for the spike in interest rates, de Leon said “the market maybe waiting for December inflation print.”

The Philippine Statistics Authority is set to release the consumer price index data for December on Wednesday, Jan. 5.