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Manila Bulletin devider Business devider Gov't rejects all bids for long-term IOUs

Gov't rejects all bids for long-term IOUs

Published Sep 26, 2023 09:22 am

At A Glance

  • The government was not able to secure P30 billion in long-term securities amid hawkish signals from local monetary officials on possible hike in local policy rates.<br>Investors demanded an average bid rate of 6.482 percent for the Treasury bonds. The secondary market rate was 6.21 percent.<br>Tenders for the debt paper totaled P27.643 billion.

The government was not able to secure P30 billion in long-term securities amid hawkish signals from local monetary officials on possible hike in key interest rates.

On Monday, Sept. 26, the Bureau of the Treasury rejected all bids for the reissued three-year debt papers. These IOUs were initially issued on Sept. 07, 2023, and still have a remaining life of two years and 11 months.

This, as investors demanded rates beyond what the government can offer.

Investors who were interested in purchasing the Treasury bonds maturing on Sept. 20, 2026, submitted bids with an average rate of 6.482 percent.

In contrast, the rate in the secondary market was 6.21 percent. This is based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System’s website.

The total value of tenders for the debt paper reached P27.643 billion.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the higher bid yields “could be a function of some reduction of bids or demand as the markets also prepare and channel some of the excess liquidity for the upcoming Retail Dollar Bond offering of the national government, as an alternative or competing investment outlet in the market.”

The recent increase in US Treasury yields as it breaches above 4.50 percent levels, also partly contributed to the higher bid yields, the economist said.

“Higher bid yields also after U.S. dollar or peso among 10-month highs and global crude oil prices still  among 10.5-month highs that could lead to some uptick in prices/overall inflation,” he added.

Related Tags

T-bonds Bureau of the Treasury
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