The Bureau of the Treasury on Tuesday rejected bids for P25 billion worth of bonds in its last auction for 2016.
National Treasurer Roberto Tan said the bureau found the rates demanded by investors too high in anticipation of the US Fed rate hike in the coming weeks.
“I think the market is still quite unsettled because of what is being anticipated for the Fed,” Tan said.
He told reporters after the auction the government decided to hold the next bond auction next year “when the market (has) absorbed and digested the Fed action happening next week.”
Bid rates in Tuesday’s auction ranged from 4.25 percent to 4.40 percent and averaged 4.358 percent, or 38.10 basis points higher than the 3.977 percent average rate in the previous bidding.
The average rates were also higher than 4.19 percent in the secondary market.
Had the government awarded the long-term debt papers, it would accept P19.41 billion of the P41.915-billion tenders.
“We have P8 billion maturing bonds. So we look at that as a factor in market deman. That is why the volume is quite meaningful, as you know it is almost fully covered in terms of the tenders. But the rates that are being bid out are quite off the market rates. So we decided to just reject,” Tan said. “We would like to accommodate following… but this might send the wrong signal.”
Tan, meanwhile, said the Monetary Board approved a government plan to $500 million in new money in 2017.
He said the foreign borrowing plan would be a one-time program to generate external funds. The government plans to borrow P631.3 billion next year based on the budget expenditures report submitted by the Budget Department to Congress, maintaining its bias toward local borrowings at a ratio of 80:20.
The Philippines is also awaiting the release of payments that will serve as the paid-in capital for its membership the Beijing-led Asian Infrastructure Investment Bank.