Upsized retail Treasury bonds fetch lower rate

MANILA, Philippines — The five-year retail Treasury bonds (RTBs) fetched a coupon rate of 6.25 percent after the Bureau of the Treasury (BTr) upsized the volume it awarded to institutional investors by almost four times.

During yesterday’s price-setting auction, the Treasury awarded retail debt papers maturing in 2024 at a coupon rate of 6.25 percent, 75.3 basis points lower than the 7.003 percent fetched by the same tenor during its previous auction last Nov. 21.

Overwhelming demand met the auction, with total tenders reaching P121.807 billion.

The BTr said this prompted the auction committee to award P113.772 billion, almost four times the initial P30 billion offer volume to take advantage of the rates and healthy market appetite.

Yesterday’s coupon-setting auction was participated by government securities eligible dealers. Meanwhile, the general investing public may still participate in the fund raising activity until March 8 by approaching the 21 authorized selling agents-banks or by buying the RTBs directly from the BTr through its online RTB facility.

“The resounding success of our RTB issuances highlights the increasing awareness of Filipinos on investment opportunities that do not only help them realize their personal goals, but also allow them to directly partake in building our nation,” National Treasurer Rosalia de Leon said.

According to De Leon, there was healthy demand during the auction, given that investors consider this their last chance to get good rates with inflation expectations continuously going downward.

“Investors view this as what we call a last trip to be able to get this good rates because of the expectations that eventually rates will be trending downwards, with inflation expectations continuing to decline, particularly with the two bills that were passed by the administration – the Rice Tariffication and the amendments to the Central Bank Act,” De Leon said.

“And also based on our initial survey, they view that inflation might really be settling around the four percent area. It really shows that we will be on the path of two to four percent inflation and within the target of the BSP within the year,” she said.

De Leon said the Treasury expects to attract about P200 billion in total tenders for the RTB offering until it closes next week, but the BTr may not avail this whole amount.

“Based on the feedback, we can reach P200 billion but I don’t think we will really be availing that much from this offering so we’ll see the demand first,” she said.

Moreover, the national treasurer said the BTr wants to increase the share of retail and individual investors in the total amount to be issued, especially now that the government has opened its online ordering platform.

This is the 22nd RTB offering of the Philippine government and the first within the year. The Philippine government has been issuing RTBs as part of its efforts to promote financial literacy and wellness among Filipinos by making investments in government securities more accessible to the public.