Government readies RTB swap

MANILA, Philippines – More than P300 billion worth of maturing bonds are eligible to be swapped by investors for the new Retail Treasury bonds (RTBs) being issued by the government, according to the Department of Finance (DOF).

In a statement, the DOF said the total outstanding amount of old debt papers that are eligible for RTB-24’s switch tender component is about P321 billion.

Under this component, holders of maturing bonds, particularly RTB 10-01, fixed rate treasury note (FXTN) 05-73, RTB 10-02 and FXTN 07-57, may exchange their old debt notes for the new RTBs.

RTB-10-01 is set to mature on Aug. 19, while FXTN 05-73 will mature on Aug. 20. RTB 10-02 will also be maturing on March 3 next year, while FXTN 07-57’s tenor will end on March 20, 2021.

Earlier, the Bureau of the Treasury (BTr) said the debt swap component presents a reinvestment opportunity for holders of eligible bonds given their forthcoming maturity dates.

“The exchange offer is likewise intended to manage refinancing risk in the debt portfolio of the country and is an integral part of its overall liability management program,” it said.

Aside from refinancing maturing debt, the government’s RTB issuance also aims to raise new funds to boost state coffers amid efforts to deal with the COVID-19 pandemic.

“Proceeds from the issuance of RTB 24 will be used to aid the country’s efforts to mitigate the effects of COVID-19 and to support the sectors most affected by the pandemic, such as the healthcare system, unemployed OFWs (overseas Filipino workers), and the struggling MSMEs (micro, small and medium enterprises),” the BTr said.

Part of the proceeds would also be used to fund infrastructure projects and other national government expenditures.

The bonds, following a price-setting auction last Thursday, carry a coupon rate of 2.625 percent, 362.5 basis points down from the 6.25 percent coupon recorded in the previous five-year RTB auction in February last year.

Investors swarmed the auction as total tenders reached P278.57 billion, allowing the BTr to capture an initial volume of P192.71 billion during the auction, alone.