The Bureau of the Treasury (BTr) sold less than half the total P15 billion worth of Treasury bonds (T-bonds) it planned to sell at auction on Tuesday as a consequence of the very high premium the market demanded for its credit.
Treasury chief Rosalia V. de Leon said the BTr sold only P6.07 billion in T-bonds but allowed the rate to climb to 4.484 percent, from only 3.60 percent when the agency last sold the IOUs.
There was no shortage of offers that in this case actually swamped the BTr, as aggregate tenders totaled P22.6 billion.
This provided the Treasury a glimpse of the state of liquidity in the market and the fact that fund managers have to deploy these much funds with as much yield or return as they can find at a time when all eyes are on the US Fed.
The US Fed is expected to tighten its monetary-policy stance shortly.
De Leon said the market is trying to stampede the Treasury into accepting bids that are out of line with numbers the agency possesses.
“The BTr has a strong cash buffer to ensure reasonable pricing of government securities,” de Leon said on the thwarted attempt to ramp up the yield on seven-year money.
She also said what the Treasury awarded the market on Tuesday represented “reasonable pricing”.
“Of course, the strong cash buffer from RTB allows us to reject if rates offered are not aligned with BTr estimates,” she quickly added.
The RTBs pertained to the October 11, 2016, sale of retail T-bonds whose proceeds allowed the Treasury to layer the national coffers with P11.77 billion worth of funds.
There was another RTB said earlier this month when the Treasury successfully sold P181 billion owing to strong demand from the investing public.
Three-year RTBs were, likewise, sold on March 28, generating another P70 billion at a coupon rate of just 4.250 percent.