National Treasurer Rosalia de Leon
MANILA – The Bureau of the Treasury (BTr) rejected all bids for the 10-year Treasury bond (T-bond) during an auction on Tuesday after investors asked for high yield.
Had the auction committee awarded the debt paper, the average rate of the T-bond would have risen to 4.883 percent from 3.185 percent previously.
The paper was undersubscribed after tenders amounted to PHP34.062 billion, lower than the PHP35-billion offer.
National Treasurer Rosalia de Leon said they fully rejected all bids because “submitted rates (are) like an arm and a leg”, referring to the high rates that investors asked during the auction.
“Inflation concerns linger and anticipated Fed (Federal Reserve) action (is) driving rates up,” she said in a Viber message to journalists.
De Leon, however, cited monetary authorities’ statement that the current elevated domestic inflation rate is transitory.
Bangko Sentral ng Pilipinas (BSP) officials expect inflation to remain high especially because of the impact of weather-related factors on supply of food items in the latter part of this year and the result of the increase in oil prices in the international market.
Monetary authorities project the rate of price increases to decelerate to within the government's 2 percent to 4-percent target band by the end of this year.
De Leon also took note of BSP Governor Benjamin Diokno’s statement regarding the timing of rate hikes, saying it is still early to increase key policy rates since economic recovery remains fragile.
Amid the rejection of bids during the T-bond auction this week, de Leon is confident of the government’s capacity to finance its requirements.
“We have (a) strong cash position supported by improving revenue collection and expected ODA (official development assistance) inflows,” she added. (PNA)
