THE national government was unable to raise a single centavo after the Bureau of the Treasury (BTr) rejected all the offers in its twin auction on Wednesday of P50 billion worth of government securities as investors continue to be aggressive in their asking rates.
The Treasury did not award a single debt paper as investors sought interest rates that were higher by as much as 169.7 basis points (bps) than prevailing secondary benchmark rates.
The Treasury auctioned P15 billion worth of Treasury bills (T-bills)—P5 billion each of 90-day, 181-day and 362-day tenors—and P35-billion Treasury bonds (T-bonds).
National Treasurer Rosalia V. De Leon said investors sought higher yields in anticipation of a hike in interest rate by the US Federal Reserve coupled with the Central Bank’s announcement on the country’s October inflation print.
Foreign news agencies reported that the Fed is expected to deliver a 75-basis-point rate hike in its November meeting.
De Leon told reporters after the auction that the market has been pricing in excessive buffers to cover for the Fed’s “sustained hawkish actions and BSP [Bangko Sentral ng Pilipinas] forecast of [October] inflation [of] 7.1 [percent] to 7.9 [percent].”
Rates for the T-bond offering averaged at 6.763 percent with a range of as low as 6 percent to as high as 8 percent. The secondary benchmark rate for the similar debt paper was only at 6.303 percent.
Treasury received rates ranging between 4.25 percent and 5.125 percent for its 90-day T-bill, 4.65 percent to 5.925 percent for the 181-day tenor and 5 percent to 6.3 percent for the 362-day government security.
The secondary benchmark rates for the government securities based on Bloomberg Valuation were at 3.75 percent (90-day), 4.535 percent (181-day) and 4.888 percent (362-day).
Investors swamped the 90-day T-bill offering as total tenders amounted to P8.485 billion while the 181-day tenor was almost fully subscribed at P4.93 billion.
The 362-day T-bill fetched tenders amounting to a little more than half of the total intended amount to be raised or about P2.67 billion.
As for the T-bonds auction, investors tendered a total amount of P36.336 billion.
The national government has been laboring to tap the local debt market in the past month as investors continue to dig their heels in their position vis-à-vis yields.
This month alone, the national government aims to raise P215 billion from the sale of debt papers. The amount covers P75 billion worth of T-bills and P140 billion in T-bonds.
For the whole year, the government is set to borrow a total of P2.21 trillion, of which 75 percent will be sourced locally while the remaining 25 percent will come from foreign sources.
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