The Bureau of the Treasury failed to sell Treasury bonds (T-bonds) at the auction designed to sell at least P15 billion worth of reissued paper on Tuesday.
Officials said the various government securities eligible dealers, mostly banks and trust companies, offered very high rates for their credit and forced the auction committee to trash all the bids submitted.
According to National Treasurer Rosalia V. de Leon, there was very little demand for the 20-year paper and that those that submitted bids quoted unreasonably high rates.
“The rates are unreasonably high so it was really disappointing. When we did the market survey, I think we were looking at five to 10 basis points and indicated an oversubscription by two or five times. Apparently, there’s no demand for the 20-year [paper] right now in spite of the very low inflation expectations. And there’s also ample liquidity. So maybe the appetite is not on the long end,” de Leon said.
The Treasury committee received lower than anticipated bids amounting to only P11.202 billion, as opposed to the proposed sale of at least P15 billion. Had the committee accepted the all bids, the 20-year rate would have jumped from 20.9 basis points to 5.244 percent.
The last time the Treasury sold 20-year T-bonds, the rate was set at 5.035 percent.
An earlier auction for the 20-year T-bond was held on June 27, when the Treasury awarded in full all P15 billion worth of government securities. Bids for the paper more than doubled, reaching P31.078 billion. The committee rejected P16.078 billion and the coupon rate for the security stood at 5.250 percent.
De Leon, at an earlier securities sale, said that the committee was met with healthy demand from investors on the back of the steady rates anchored by the Bangko Sentral ng Pilipinas, the roll back in oil prices and low inflation expectations.
The maiden sale of 20-year T-bonds was held on May 16.