BTr rejects all bids for 10-year T-bond

The Bureau of the Treasury’s (BTr) auction committee on Tuesday rejected all bids for the 10-year Treasury bond on what National Treasurer Rosalia De Leon dubbed as aversion for long-tenor securities. (Photo: Bureau of the Treasury/Facebook)

MANILA — The Bureau of the Treasury’s (BTr) auction committee on Tuesday rejected all bids for the 10-year Treasury bond on what National Treasurer Rosalia De Leon dubbed as aversion for long-tenor securities.

BTr offered the debt paper for PHP20 billion but bids only amounted to PHP18.676 billion.

Banks also asked for high yields, with the highest hitting 6.500 percent, higher than the 4.915 percent the same tenor fetched during the auction on Nov. 7, 2017.

In the secondary market, the same tenor fetched a yield of 5.9157 percent in the morning session Tuesday.

De Leon said appetite for the 10-year bond was low because banks were hopeful for the increase of interest rates in the coming months vis-à-vis the expected hikes in respective key rates of the Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).

She said banks were  also somewhat concerned on issues on the supposed overheating of the domestic economy.

“But I guess all those fears have been allayed by the Governor (Nestor A. Espenilla Jr.) and Deputy Governor Diwa (Guinigundo) also,” she said.

Meanwhile, De Leon said they were still awaiting regulatory approvals for the government’s planned US dollar bond and Panda bond issuances.

She said the planned US bond issuance, which was normally issued in the first quarter of the year, was still being assessed by the US’ Securities and Exchange Commission (SEC), which was also reviewing the Philippine government’s filing, reform programs and continuity of policies, among others.

Last year, the government issued USD2-billion worth of 25-year global bond, USD500 million of which was in new money while the remaining volume was used to swap previously-issued bond with higher yields.

For this year, the plan was to raise USD1 billion in new money along with the issuance of additional volume to be swapped for existing securities, De Leon said.

On the planned Marawi bond, De Leon said they were still awaiting more information on the programs to be implemented to be able to determine how much money was needed to be raised.

She said one of the features being considered for the Marawi bond was for it to be tapped by banks for their Agri-Agra compliance.

“That would be the lead for the banks because that would really something that they like to grab,” he said.

Banks are required under Republic Act 10000, otherwise known as An Act Providing for an Agriculture and Agrarian Reform Credit and Financing System Through Banking Institutions, to allocate 10 percent of their funds for agrarian reform credit and 15 percent for other agricultural credit.

De Leon stressed that all these planned bond issuances were aimed at allowing the government augment its funding requirement at least cost.