The Bureau of the Treasury on Tuesday rejected all bids for its reissued 7-year Treasury bonds after investors demanded higher yields driven by rising inflation fears and global market volatility.
The auction drew P33.7 billion in total tenders, surpassing the P30-billion offer. Despite the strong demand, the Treasury chose to cancel the award rather than accept the higher borrowing costs.
If the government had accepted the bids, the average rate for the reissued bonds would have reached 7.915 percent. This implied yield sat significantly higher than the comparable 7-year Philippine Bloomberg Valuation benchmark yield of 7.60 percent.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said international geopolitical tensions are actively influencing local investor behavior.
“Investors have been waiting for the peak in bond yields or to top out before taking investment positions to maximize the yield to be locked in amid higher inflation and inflation expectations recently as the Strait of Hormuz remains closed,” Ricafort said.
The bond series holds an outstanding volume of P199.5 billion with a remaining term of 7 years and 3 months.
