The government rejected on Tuesday all bids tendered at the auction for 10-year Treasury bonds due to high yields demanded by investors.
At the auction for 10-year T-bonds, investors demanded an average yield of 3.573 percent, with some bids demanding as high as 3.621 percent on the bonds.
The average rates demanded were even higher than the 3.501-percent average rate that seven-year T-bonds fetched last December 2014. The previous auction for T-bonds had an average rate of 3.039 percent.
Although the auction was oversubscribed, with total tenders amounting to P41.226 billion, as against the P25-billion offering, the Bureau of the Treasury (BTr) did not believe the rates demanded by investors were where they ought to be.
“Even if we look at the rates that the various players demanded, we can see that there’s no consensus among themselves, which indicates that they’re also tentative on what should be the right price,” National Treasurer Roberto Tan said.
Perhaps, Tan said, the reason the investors demanded such high rates was because they wanted to book income from the yields this early into 2015.
“They’re trying to see how far they can go. They’re trying to book income for the first quarter in their financial statements,” Tan said.
The aborted T-bonds reissued on Tuesday would have matured in August 2024, with a coupon rate of 4.125 percent.