Treasury rejects bids for 10-year debt securities
11/17/2009 | 07:12 PM
The Philippines failed to raise fresh cash from investors after it rejected bids for 10-year treasury bonds on Tuesday.
For the second time since October 20, the Bureau of the Treasury (BTr) was prompted to turn away investors after they sought higher rates for the ten-year debt securities.
As a result, the government was unable to raise at least P6.5 billion in fresh funds.
Tuesday’s auction opened with tenders worth P3.480 billion for a planned size of P6.5 billion but it only took the BTr a little more than a minute to turn these down.
Tenders were likewise undersubscribed almost twice, reaching only P3.480 billion.
If it accepted bids for the debt paper, the average rate could have gone up by 69.8 basis points to 7.379 percent from the previous 6.678 percent given to the same securities.
The 69.8 basis point rise breached the market’s forecast of at least 7.25 percent.
Investors could have held off from bidding for the bonds since they lie in wait for October’s deficit figures, National Treasurer Roberto Tan said.
“The bids were widening on the high side. There’s also an undersubscription of volume," he said. “They’re fence-sitting."
The government’s fiscal numbers are being awaited anytime this week.
From January to September, the budget deficit has already reached P238 billion, just P12 billion shy of its full-year goal of P250 billion.
The BTr is also mulling over plans to sell longer-dated debt papers for the last three auctions for the year owing to growing market appetite for such securities.
For December, the agency initially planned to offer only 10-year bonds worth P6.5 billion after it undertakes a one-time sale of 25-year treasury bonds in the last week of November.
The government intends to sell only P65 billion worth of treasury bills and bonds for the last quarter, substantially lower than the third quarter’s programmed P110.5 billion.
The borrowing program was downgraded after it sold retail treasury bonds last month, a transaction that allowed the government to raise P114.4 billion.
The government also sold dollar-denominated bonds to foreign investors worth $1.5 billion and $750 million in January and July, respectively. - GMANews.TV
For the second time since October 20, the Bureau of the Treasury (BTr) was prompted to turn away investors after they sought higher rates for the ten-year debt securities.
As a result, the government was unable to raise at least P6.5 billion in fresh funds.
Tuesday’s auction opened with tenders worth P3.480 billion for a planned size of P6.5 billion but it only took the BTr a little more than a minute to turn these down.
Tenders were likewise undersubscribed almost twice, reaching only P3.480 billion.
If it accepted bids for the debt paper, the average rate could have gone up by 69.8 basis points to 7.379 percent from the previous 6.678 percent given to the same securities.
The 69.8 basis point rise breached the market’s forecast of at least 7.25 percent.
Investors could have held off from bidding for the bonds since they lie in wait for October’s deficit figures, National Treasurer Roberto Tan said.
“The bids were widening on the high side. There’s also an undersubscription of volume," he said. “They’re fence-sitting."
The government’s fiscal numbers are being awaited anytime this week.
From January to September, the budget deficit has already reached P238 billion, just P12 billion shy of its full-year goal of P250 billion.
The BTr is also mulling over plans to sell longer-dated debt papers for the last three auctions for the year owing to growing market appetite for such securities.
For December, the agency initially planned to offer only 10-year bonds worth P6.5 billion after it undertakes a one-time sale of 25-year treasury bonds in the last week of November.
The government intends to sell only P65 billion worth of treasury bills and bonds for the last quarter, substantially lower than the third quarter’s programmed P110.5 billion.
The borrowing program was downgraded after it sold retail treasury bonds last month, a transaction that allowed the government to raise P114.4 billion.
The government also sold dollar-denominated bonds to foreign investors worth $1.5 billion and $750 million in January and July, respectively. - GMANews.TV
