THE Bureau of the Treasury (BTr) on Tuesday fought back buyers that sought to push up interest rates on government debt papers.
Deputy Treasurer Erwin D. Sta. Ana told reporters that the auction committee decided to reject all bids for the reissued seven-year Treasury bonds (T-bonds) after seeing rates for the government security breached internal estimates.
“The rates were high; for the committee, the bids came in unreasonably high. We looked at the last time we issued this security and the five-year [papers], there’s really a huge pick up from last auction’s rates,” Sta. Ana said. “So the committee decided to reject at this time.”
Tenders for the T-bond reached P24 billion. Were the auction committee decided to award the full P15 billion on offer, the average annual rate would have settled at 8.284 percent. This would have reflected a 119.9 basis-point increase compared to the last auction rate for the security, which was capped at 7.085 percent.
In terms of the bids for the security, Sta. Ana explained that a substantial amount of debt papers will be maturing this week, which could be a reason investors were looking to make investments in securities.
“We have P11 billion in maturities for this week, so possibly dealers are actually looking for ways to invest those,” he said. “And it’s already an interesting proposition to go back to government securities because of the increasing rates. That has been one of the feedbacks we’ve received; so you know that’s why they are coming in now.”
The last auction for the seven-year T-bond happened on September 25, with the BTr partially awarding the security with P5.73 billion fromz the P15 billion on offer.
Meanwhile, the reissued five-year T-bond was auctioned earlier in October with the auction committee awarding P9.740 billion from the P15 billion on offer. The average annual rate was capped at 7.342 percent.