BTr to issue RTBs starting July 15

MANILA, Philippines ? The government is set to offer retail Treasury bonds (RTBs) to small investors starting next week to boost the state coffers amid the coronavirus disease 2019 or COVID-19 pandemic, the Bureau of the Treasury (BTr) said yesterday.

In a text message to reporters, National Treasurer Rosalia De Leon confirmed that the BTr plans to issue RTBs, with the price-setting auction scheduled on July 15.

She said full details for the fund raising activity would be released within the week.

“We are taking advantage of low rates and providing secure investment outlets. (It’s a) win-win proposition and demonstrates our solidarity against the pandemic,” De Leon said.

According to the treasurer, funds raised from the RTB issuance will be used for budgetary support amid a widening fiscal deficit due to the pandemic.

For 2020, economic managers expect the budget gap to widen to as much as P1.613 trillion, or 8.4 percent of the gross domestic product (GDP), due to weak revenue generation and increased spending for COVID-19 response.

The planned RTB offering would be the 24th tranche to be issued by the government, and the second this year.

Last January, the national government successfully raised P310.8 billion from the issuance of three-year RTBs, the highest volume ever recorded for any of its retail offerings.

The debt papers, which will mature in 2023, carry a coupon rate of 4.375 percent.

Government securities have recently been able to fetch low interest rates following the 50-basis point rate cut implemented by the Bangko Sentral ng Pilipinas (BSP).

Just yesterday, rates for Treasury bills (T-bills) maturing in 91 days, 182 days and 364 days declined across-the-board.

Ninety-one day securities fetched an average rate of 1.649 percent, 9.7-basis point down from last week’s 1.746 percent.

The P5 billion offering was more than six times oversubscribed, with total tenders amounting to P32.657 billion. This allowed the auction committee to double the accepted non-competitive bids and upsize the issuance to P7 billion.

The average rate for 182-day debt papers also dropped by 14.2 basis points to 1.75 percent from 1.892 percent last week.

Total tenders amounted to P34.57 billion, almost seven times larger than the P5 billion offering. This prompted the Treasury to increase the accepted volume to P7 billion.

Lastly, rates for 364-day T-bills averaged at 1.855 percent, 12.5 basis points down from the 1.98 percent recorded in the previous auction last week.

The auction committee fully awarded the P10 billion offering, which was almost five times oversubscribed with total bids reaching P49.669 billion.

De Leon attributed the decline in rates to the 50-basis point rate cut announced by the central bank two weeks ago, as well as strong liquidity in the financial system.

“We have P38.35 billion in maturities back to the system,” she said.

Overall, yesterday’s auction was able to raise P24 billion in funds for the government, higher than the initial offer volume of P20 billion.