National Treasurer Rosalia de Leon
MANILA – The Bureau of the Treasury’s (BTr) auction committee on Tuesday rejected all bids for the 20-year Treasury bond (T-bond) with a remaining life of 12 years after investors asked for high yield.
Had the auction committee awarded the debt paper, the rate of the T-bond would have averaged 3.501 percent, which National Treasurer Rosalia de Leon said would be higher than those in the secondary market.
However, had the auction committee awarded the paper, its rate would be lower than the 5.341 percent that the 20-year T-bond fetched in November 2019.
De Leon said the interest rate of the 12-year debt paper in the secondary market is currently less than 3 percent.
“Bids way too high vs. valuation for the tenor,” she said, attributing the demand for high returns to “additional duration as BSP takes pause in accommodative stance.”
This was after the Bangko Sentral ng Pilipinas (BSP) kept key rates steady last week after noting that inflation is still expected to stay within the government’s 2 percent to 4 percent target from 2020 to 2022.
Monetary authorities said their decision would also allow past rate easing measures to work its way into the economy.
“Expect rates to remain steady with a good volume of liquidity and preference for haven assets,” de Leon added.
The BTr offered the debt instrument for PHP30 billion and bids were higher at PHP46.9 billion. (PNA)
