The various government securities eligible dealers on Tuesday wrongly believed it could stampede the Bureau of the Treasury (BTr) into accepting unreasonably high bids on seven-year Treasury bonds. They thought wrong.
National Treasurer Rosalia de Leon thwarted the attempt and rejected all bids and could not hide her disappointment at the outcome of the offering.
De Leon acknowledged the bids that the auction committee flatly refused to entertain exceeded expectations.
“We rejected all bids. Submission (was) too high compared to our internal estimates,” she told reporters.
According to the Treasury chief, offers for the seven-year IOU came in very high reaching 7 percent averaging 5.583 percent and compares against only 4.732 percent when the bonds were offered last.
Clearly, the BTr chief said, government securities investors prefer to hold on to their cash given current conditions.
“Cash remains king,” she said.
De Leon previously anticipated this event, saying the rise in rates and the tepid demand will persist in the weeks to come.
In all, the auction attracted P31.35 billion worth of tenders or a slight oversubscription of the original P30 billion offering.