Government raises P134 billion from retail T-bonds

MANILA, Philippines — The government successfully raised P134 billion from the issuance of three-year retail Treasury bonds (RTB) as investors swarmed the first day of the fund raising activity, according to the Bureau of the Treasury (BTr).

During a price-setting auction yesterday, the BTr raised P134 billion from the issuance of RTBs maturing in 2023. This is more than four times higher than the original target volume of P30 billion set by the Treasury.

The Treasury was prompted to upsize the awarded volume to take advantage of the healthy market appetite, with the auction almost five times oversubscribed, attracting total tenders amounting to P149.827 billion.

As a result, the securities fetched a coupon rate of 4.375 percent, which is higher than the secondary market rate for securities with the same tenor, recorded at 4.253 percent as of yesterday before the auction closed.

This is the 23rd tranche of RTBs to be issued by the government and the first for 2019.

The RTBs will be offered to the general investing public in minimum denominations of P5,000 until Feb. 6.

In an interview, National Treasurer Rosalia de Leon said the auction committee decided to award the securities at 4.375 percent to provide an incentive for individual investors to participate in the fund raising activity.

De Leon said there is also a possibility that the total orders for this tranche could match the record-high of P255.4 billion raised by the government during an RTB issuance in 2017.

She said switch tenders would initially be capped at P15 billion a day, but the total accepted offers would still depend on the overall demand from the holders of the old RTBs.

“P180 billion is the outstanding (RTBs) right now and that will mature in April, so all the volume will be eligible for the switch (tender). Per day, we will cap the amount at P15 billion, but we reserve the right as to how much we will accept. We can also upsize in the same manner than we upsized in our auction today,” the BTr chief said.

Interested investors may order the bonds over-the-counter in 23 selling agents, or online through the Land Bank of the Philippines, Development Bank of the Philippines and the First Metro Investment Corp.

Proceeds from the issuance of three-year RTBs will be used for general budgetary purposes, such as the implementation of infrastructure projects and provision of social services.

RTBs are also a part of the government’s efforts to promote financial inclusion by making basic investment instruments accessible to the public.