The government was not able to secure P30 billion in long-term securities amid hike in local policy rates.
Investors demanded an average bid rate of 6.482 percent for the Treasury bonds. The secondary market rate was 6.21 percent.
Total tenders totaled P26.899 billion, or more than the government's offer of P30 billion.
Gov’t rejects all bids for 10-year IOUs
Oct 31, 2023 09:42 AM
At a glance
The government rejected all bids for its long-term debt papers on Tuesday, Oct. 31, after investors sought higher yields.
The Bureau of the Treasury rejected all bids for the reissued 10-year debt papers. These IOUs were initially issued on Jan. 10, 2019, and still have a remaining life of five years and two months.
Total tenders reached P26.899 billion, or more than the government's offer of P30 billion.
Had the bureau accepted the tenders, the interest rate on the debt papers would have risen to 7.196 percent, which is higher than the 6.71 percent of the comparable five-year rate in the secondary market.
The higher bid yields could be due to the increase of 5-year US Treasury yields after posting a new 16-year high of 4.99 percent on Oct. 19, said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.
He also cited the recent increase in the overnight or 1-day RRP auction yield at 6.37 percent, which is much higher than the 6.14 percent from Sept. 20 to Oct. 26.
The chief economist also said that the recent hike in local policy rates and lingering geopolitical risks related to the Israel-Hamas conflict can be attributed to higher rates