Connect with us

Hi, what are you looking for?

News

Treasury rejects all tenders for reissued 3.5-year bonds

THE GOVERNMENT rejected all bids for its offer of reissued 3.5-year bonds as investors wanted higher yields. — BW FILE PHOTO

THE GOVERNMENT rejected all bids for reissued 3.5-year Treasury bonds (T-bonds) it offered on Tuesday as the market asked for higher yields amid expectations of more rate hikes here and abroad.

The Bureau of the Treasury (BTr) did not accept any tenders for the reissued 3.5-year securities that have a remaining life of three years and five months.

Total bids for the tenor reached P40.732 billion, lower than P106.32 billion when the bond series was first offered on Aug. 2. At that auction, the government made a full award of its P35-billion offer of fresh papers, even awarding another P10 billion via a tap facility offer, as the strong demand seen caused yields to come in below secondary market levels.

Had the Treasury fully awarded the bonds at its Tuesday auction, the tenor’s average rate would have jumped by 43.9 basis points (bps) to 5.592% from the 5.153% average quoted for the bond at the Aug. 2 offer and by 34.2 bps from its 5.25% coupon.

This would also be 13.67 bps above the 5.4553% quoted for the four-year bond at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Reference Rates data provided by the BTr.

National Treasurer Rosalia V. de Leon said in a Viber message to reporters that while demand for the T-bond offer on Tuesday was “still good,” investors wanted an “excessive buffer” as they anticipate the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) to continue raising their respective benchmark interest rates.

Analysts said the market wanted higher rates as Philippine inflation remains elevated, which could prompt the BSP to hike borrowing costs further.

“It looks like the market has no appetite for this bond given the CPI (consumer price index) print,” a trader said.

The trader said the BTr can also afford to reject high bids following its recent offering of retail Treasury bonds. The Treasury raised P420.448 billion from the 5.5-year retail bonds it offered from Aug. 23 to Sept. 2. The RTBs carry a coupon of 5.75% and will be issued on Sept. 7.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said T-bond yields climbed amid still high inflation and a weaker peso.

Fed Chair Jerome H. Powell said at the Jackson Hole symposium on Aug. 26 that the US central bank will hike interest rates as needed and keep them high for some time to bring inflation back within target. The US central bank has raised rates by 225 bps so far since March.

BSP Governor Felipe M. Medalla last week said the Fed’s next policy move will be a “big factor” to consider for the Monetary Board at their Sept. 22 meeting as the US central bank’s review will happen on Sept. 20-21.

The BSP has increased borrowing costs by 175 bps since May as it seeks to rein in rising prices.

Mr. Medalla said the central bank is concerned about the impact of the peso’s continued depreciation against the dollar on inflation. The US central bank chief’s hawkish Jackson Hole speech caused the dollar to close at multi-decade highs, causing other currencies to weaken, including the Philippine peso.

Headline inflation slowed to 6.3% in August from the near four-year high of 6.4% seen in July, the Philippine Statistics Authority reported on Tuesday.

While the result was within the BSP’s 5.9-6.7% forecast for the month, it was the fifth consecutive month inflation went beyond the central bank’s 2-4% target. It was also faster than the 4.4% headline print logged in August 2021.

For the first eight months, inflation averaged 4.9%, faster than 4% in the same period a year prior but below the BSP’s 5.4% forecast for 2022.

On Monday, the peso closed at a new record low of P56.999 per dollar after hitting P57 intraday. As of Sept. 5, the local unit has depreciated by 11.76% or P5.999 from its P51 close on Dec. 31, 2021.

The BTr wants to raise P200 billion from the domestic market this month, or P60 billion through Treasury bills and P140 billion via T-bonds.

The government borrows from local and external sources to help fund a budget deficit capped at 7.6% of gross domestic product this year. — D.G.C. Robles

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

News

PHILIPPINE STAR/ MICHAEL VARCAS WASHINGTON D.C. — The United States is seeking to form a coalition of countries to drive negotiations on a global...

News

Buildings are seen along EDSA in Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN By Diego Gabriel C. Robles  THE WORLD BANK (WB) upgraded...

News

Heavy traffic is seen on the southbound lane of EDSA in Cubao, Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN THE PHILIPPINE auto industry’s...

News

REUTERS THE BANGKO SENTRAL ng Pilipinas (BSP) may deliver a second off-cycle rate hike in early November when the US Federal Reserve is expected...

News

Vendors arrange their goods at a public market in Manila. — PHILIPPINE STAR/ RUSSEL A. PALMA THE ASIAN Development Bank (ADB) is planning to...

Editor’s Pick

With the reversal of the 1.25% rise in National Insurance Contributions happening on the 6th of November, employers across the nation have an opportunity...

You May Also Like

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.