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Philippines: High rates force rejection of all T-bond bids
MANILA, Philippines — The government yesterday failed to borrow P35 billion from domestic investors after they asked for yields that went beyond expected levels.
The Bureau of the Treasury rejected all bids for the P35 billion in reissued 10-year Treasury bonds (T-bonds) due to mounting monetary pressures.
Likewise, demand for the long-term securities fell short of the offer at P34.062 billion, proof of investor sentiment turning against bonds maturing in years.
The Treasury dismissed all bids as the yield demanded by investors averaged at 4.883 percent, and went as high as 6.5 percent. The average rate exceeded by 84.6 basis points the quotation of 4.037 percent for the debt papers and by 71.5 bps the estimate of 4.168 percent for six-year issues.
National Treasurer Rosalia de Leon said the Treasury made a full rejection, as investors asked for rates “like an arm and a leg.”
She said investors sustained their pressure on asking price to cover for risks posed by inflationary risks, as well as the looming taper in the US.
“Inflation concerns linger and anticipated Fed action driving rates up, but BSP (Bangko Sentral ng Pilipinas) views high inflation as transitory,” she said in a text message to reporters. “(BSP) Governor’s statement that still early to lift rates should assure market,” she added.
According to BSP Governor Benjamin Diokno, increasing interest rates soon will only intensify inflationary pressures in a period when the government has failed to contain price increases within target.
Inflation or the general increase in commodity prices slowed to 4.8 percent in September from 4.9 percent in August. In spite of this, inflation averaged 4.5 percent from January to September, breaching the government’s target range of two to four percent.
Source: https://www.philstar.com/business/2021/10/20/2135279/high-rates-force-rejection-all-t-bond-bids