Gov't sets first retail bond offer in three years

MANILA, Philippines -- The Philippines will launch its first retail Treasury bond offer (RTBs) in three years on Tuesday, banking on the country's strong economic fundamentals as a new administration seeks to increase spending and widen the deficit.

 

In a notice on its website on Friday, the Bureau of the Treasury said the government will sell a minimum of P30 billion worth of 10-year RTBs with the final rate yet to be determined.

 

The offer will run from Sept. 6-16 and the issue date was set on Sept. 20. 

 

"The Republic reserves the right to increase the over-all size of the issue," the agency said.

 

This marks the first time since 2013 that the country will issue RTBs, which can be purchased by individual investors for a minimum of P5,000.

 

Three years ago, a total of P150 billion in 10-year papers was awarded, five times the minimum offer as tenders reached P271.59 billion. They fetched a rate of 3.25 percent. 

 

Those bonds are now trading between 3.325 and 3.45 percent.

 

National Treasurer Roberto Tan said more details will be released on Tuesday when the Treasury also holds its regular local bond auction.

 

"For the volume during the offer period, we will be flexible depending on the demand," he said in a text message. 

 

The issuance is the first since the Duterte administration took over, vowing to increase spending and widen the budget deficit, while also keeping this year's borrowing program.

 

Under its plan, the new government is targeting a budget gap of P388.86 billion, equivalent to 2.7 percent of economic output. The original goal was only two percent.

 

The government borrows from the local and international investors to finance its deficit and pay existing debts.

 

Sought for comment, a bond trader said the timing of the issuance was perfect, following the report the economy grew seven percent in the second quarter.

 

"I think the Treasury thought it is a good opportunity for the retail investors to be given another avenue to invest as the country's fundamentals remain positive," she said in a phone interview. 

 

"They are coming from a strong position," she added.