Gov’t rejects bids for 5-year treasury bonds

The government rejected all bids for the five-year Treasury bonds in an auction on Tuesday, saying players in the domestic capital market could not force it to pay absurdly high interest rates even if it was in dire need of cash to fund pump-priming initiatives.

National Treasurer Roberto Tan said that if domestically situated banks would continue to seek for “absurdly” high yields on government securities, the Bureau of the Treasury could slash the government’s domestic borrowing requirement in favor of more loans from foreign creditors.

He said speculations that the government might again raise its deficit ceiling for the year, from the latest P199.2 billion, because of the need to stimulate a weaker-than-expected economy, made market players believe the government needed more money. In turn, they started seeking for higher returns from government securities, Tan said.

Inquirer