The National Treasury rejected some of the tenders treasury bills and all the bids for the 10-year bonds at the auction Tuesday, where market participants sought higher yields following the off-cycle decision of the Bangko Sentral ng Pilipinas to raise its benchmark interest rates to tame inflation.
Yield across treasury bills were higher despite the bid rejections for six- and 12-month debt securities made by the National Treasury, with average rate on the 91-day treasury bill rising to 6.343 percent from 6.149 percent last week. The entire P5 billion offer for 3-month papers were awarded as total tenders reached P7.84 billion.
The average rate on the six- and 12-month treasury bills were capped at 6.462 percent and 6.592 percent, respectively, as the National Treasury only made partial awards for the P5 billion offered for each maturity. Tenders for the six-month paper totaled P6.41 billion but the National Treasury only accepted P3.95 billion of the bids.
Meantime, the entire tender for the one-year bill reached P7.7 billion but only P3.8 billion was accepted to cap the increase in yield.
At last week’s auction, yield on the six-month debt paper was 6.330 percent while that on the one-year bill stood at 6.479 percent.
Meantime, the Auction Committee decided to fully reject bids for the reissued 10-year treasury bonds offered at Tuesday’s auction.
With a remaining term of 5 years and 2 months, the average rate for the reissued treasury bonds would have soared to 7.196 percent had it been awarded.
Total tenders for the P30 billion offer only reached P26.9 billion, suggesting the market uncertainty on how long the high interest rates would last.
The BSP on Thursday raised overnight rates by another 25 basis points to 6.500 percent and said it could tighten policy rates further at its meeting on Nov. 16 if inflation remains stubbornly high and inflationary pressures are undermining growth.
The central bank now expects inflation to stay above its target range of 2 percent and 4 percent, and now expects inflation to go back to target range in the second-half of 2024, at least six months later than initially expected.
