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BTr rejects all bids for a 7-year T-bond.

On Tuesday, the Bureau of the Treasury (BTr) rejected all bids for the seven-year Treasury bond (T-bond), citing the auction committee’s assessment that the rates, albeit lower than the last auction, remained high.

Tenders totaled PHP52.267 billion for the T-bond, which was sold for PHP20 billion.

The rate of the securities would have fallen to 4.395 percent from 4.468 percent if the committee had granted the paper.

In a Viber message to media, National Treasurer Rosalia de Leon said, “We find that there is more room for rates to drop following (the) deceleration in inflation and assurance from (Bangko Sentral ng Pilipinas) Governor (Benjamin Diokno) to keep rates constant.”

The rate of price rises dropped even more in November, down to 4.2 percent from 4.6 percent in October.

To date, average inflation has been 4.5 percent, which is still higher than the government’s target range of 2 to 4 percent.

“The market has not fully integrated that once supply disruptions are addressed, inflation will be back within the objective,” De Leon added.

Investors are also thinking about the Federal Reserve’s anticipated rate hikes and the rate at which asset purchases are being tapered, according to her.

“On the domestic front, (the market) will be looking at the December inflation print as well as the findings of the MB (Monetary Board) policy meeting this Thursday,” she added.

Other factors influencing market emotions include developments in the pandemic, such as the appearance of new forms of the coronavirus disease 2019 (Covid-19) and vaccine efficacy, she said.

De Leon stated that the government will “borrow less and reduce domestic (borrowings) at 77 (percent of total) instead of 81 percent next year to allow room for (the) private sector with increased lending following (the) liberalization of the economy.”

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