THE GOVERNMENT rejected all bids for the reissued three-year Treasury bonds (T-bonds) it offered on Tuesday due to weak demand and as investors asked for higher yields ahead of the retail dollar bond (RDB) auction.

The Bureau of the Treasury (BTr) did not accept offers for its auction of P30 billion in reissued three-year T-bonds, which have a remaining life of two years and 11 months.

The bond offering was undersubscribed, with bids for the tenor reaching just P27.643 billion.

Had the Treasury accepted all tenders, the issue’s average rate would have been at 6.482%, 23.2 basis points (bps) higher than the 6.25% coupon for the issue and 26 bps above its 6.222% average rate when it was first offered on Sept. 5.

This was also 27.4 bps higher than the 6.208% quoted for the three-year bond and 30.1 bps above the 6.181% seen for the same bond series at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

“The total outstanding volume for the series currently stands at P21.2 billion,” the BTr said in a statement on Tuesday.

The Treasury rejected all bids for the reissued bonds as investors asked for high rates and as the offer went undersubscribed, a trader said in a phone interview.

The BTr did not make an award as demand was weak due to the government’s upcoming RDB offer on Wednesday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The government will hold a price-setting auction for the five-and-a-half-year onshore RDBs on Sept. 27, with a minimum issue size of $200 million.

The bonds will be offered to the public from Sept. 27 to Oct. 6.

The issue date is set on Oct. 11, and the bonds will mature on April 11, 2029.

Rates rose partly due to elevated US Treasury yields, Mr. Ricafort added.

The BTr wants to raise P180 billion from the domestic market this month, or P60 billion via Treasury bills and P120 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year. — AMCS