The Bureau of the Treasury (BTr) has rejected bids for the treasury bonds auctioned yesterday as investors sought higher yields for the government securities.
The reissued 20-year paper, with 12 years and seven months to maturity, fetched an average rate of 3.501 percent, higher than the secondary market benchmark and trading rate for the security, the BTr said.
Rosalia de Leon, national treasurer, said in a Viber group with reporters after the auction the bids were “way too high” compared to valuation for the tenor.
De Leon said for a tenor of 12 years, the expected valuation is below 3 percent.
Asked what pushed rates higher, de Leon said, “Asking for higher return for additional duration as BSP (Bangko Sentral ng Pilipinas) takes pause in accommodative stance.”
The Monetary Board, during its meeting last Thursday, decided to keep its policy settings steady.
The BSP’s overnight reverse repurchase facility was maintained at 2.25 percent. The interest rates on the overnight deposit and lending facilities were likewise kept at 1.75 percent and 2.75 percent.
The Monetary Board however decided to increase big and thrift banks’ limit on real estate loans to 25 percent from 20 percent.
Nevertheless, the auction was oversubscribed with total bids reaching P46.9 billion, more than 1.5 times the P30 billion offering.
“Expect rates to remain steady with good volume of liquidity and preference for haven assets,” de Leon said.