THE GOVERNMENT rejected all bids the reissued 20-year Treasury bonds (T-bond) it placed on the auction block Wednesday, as investors sought rates higher than yields at the secondary market.

The Bureau of the Treasury (BTr) did not accept any bids for its P20-billion offer of reissued 20-year bonds on Wednesday, even as tenders amounted to P31.717 billion, more than the programmed offering.

Had the BTr made a full award, the papers would have fetched an average rate of 6.215%, down 50.1 basis points from 6.716% fetched when the debt notes were last offered on Jan. 22.

The 20-year IOUs carry a 6.75% coupon quoted when these were first floated earlier this year. This week, market players asked for returns ranging from 6.125% to 6.25%.

At the secondary market, the debt papers were quoted at 6.04%, based on the benchmark Bloomberg Valuation Service reference rates.

Yesterday’s auction was originally scheduled to be held last Tuesday. However, it was moved by a day after government work was suspended by President Rodrigo R. Duterte following the magnitude 6.1 earthquake that jolted several areas in Luzon, including Metro Manila.

Following Wednesday’s auction, National Treasurer Rosalia V. De Leon said yields offered by investors were too high compared to rates at the secondary market.

“Full rejection because if you would look at the average, it would be like 18-20 bps higher than the secondaries,” Ms. De Leon told reporters yesterday.

“If we’re”going to accept, then definitely…the secondaries will really trend upwards.”

Sought for comment, a bond trader said yesterday’s auction result was within market expectations.

“It was higher than those in the secondary market as players played defensive amid lack of fresh leads,” the trader said in a phone interview.

Ms. De Leon added that all bids for the 20-year bonds were rejected given the “huge accumulations” of the Treasury.

“We still have to see how the spending pattern will be,” the official said.

The Treasury is raising P315 billion from the domestic market this quarter through auctions of securities, offering P195 billion in Treasury bills and another P120 billion in T-bonds.

Meanwhile, Ms. De Leon added the BTr will likely offer the yuan-denominated “panda” bonds in May, as they are still working to get regulatory approvals.

“We are waiting for the approval…. Most likely, May na ang panda kasi wala pa kaming approval (the panda bonds will be offered in May since we still don’t have the necessary approvals yet),” she said.

The new schedule was later than the previous pronouncement of Deputy Treasurer Erwin D. Sta. Ana that the yuan-denominated papers will be offered “the week after the Holy Week.”

Ms. De Leon previously said the government is seeking to sell panda bonds amounting to $300-500 million with a tenor of either three, five or seven years.

This is lower than the $230 million or 1.46 billion renminbi in panda bonds offered by the government last year, marking its first foray into the Chinese capital market. The three-year papers offered in May fetched an average rate of five percent.

The state plans to borrow P1.189 trillion this year — 75% of which will be sourced domestically while the remainder will be from foreign creditors — to fund the budget deficit and support increased government spending. — Karl Angelo N. Vidal