THE Bureau of the Treasury rejected all bids for the 7-year Treasury bonds (T-bonds) as investors demanded unacceptable rates, tracking the rise in yields across global markets.
After yields for the reissued 7-year debt papers climbed on Tuesday’s auction, National Treasurer Sharon P. Almanza told the BusinessMirror that the government is ready to reject bids that are ‘too high.’
Rates would have shot up by 127.2 basis points had the auction committee awarded the full P30-billion offering.
The auction was 1.1 times oversubscribed, as bids for the security amounted to P33.675 billion.
If the auction committee decided to award all bids, the 7-year T-bonds yield would have averaged at 7.915 percent, increasing by 127.2 basis points from the previous auction rate of 6.643 percent.
The highest yield investors demanded for the security was 8.125 percent, while the lowest was 7.625 percent.
‘The NG has other funding options to finance our requirements for the year and can make adjustments when necessary,’ Almanza told the newspaper.
At the start of the year, the Treasury has been upsizing the volume of Treasury bills it awarded and even opened the tap facility to accommodate excess market demand.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said investors are waiting for bond yields to peak to maximize their gains amid higher inflation as the Strait of Hormuz remains blocked.
With inflation in April accelerating to 7.2 percent and the peso hitting record lows recently, Ricafort said this could make imports more expensive and push inflation higher.
In the secondary market, the 7-year yield stood at 7.60 percent-the highest since November 2018.
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, told the BusinessMirror that investors prefer to hold on to securities for a short duration and ask for a higher term premium. Coupled with this preference are inflation uncertainty, shifting rate-cut expectations, and elevated global yields, particularly from US Treasuries, Asuncion added.
‘Bond yields remain elevated across major economies, tightening financial conditions,’ Asuncion wrote in a separate note. ‘While geopolitical tensions may be easing at the margin, uncertainty remains high and markets are recalibrating to structurally higher rates.’
The benchmark 10-year US Treasury yield went up to near 1-year highs at 4.60 percent-the highest since May 2025-which could lead to higher borrowing costs worldwide.
Next week, the Treasury will auction T-bonds with tenors of 4 years and 10 years to raise a total of P30 billion.
This month, the Treasury aims to borrow as much as P268 billion from the issuance of Treasury bills and T-bonds.
As of the end-March 2026, the government’s outstanding debt reached P18.488 trillion, with the debt-to-GDP ratio rising to 65.2 percent.