Government raises P458 billion from RTB auction

Elijah Felice Rosales - The Philippine Star

MANILA, Philippines — The government raised P458 billion from yesterday’s auction of Retail Treasury Bonds (RTBs), according to the Bureau of the Treasury (BTr).

The amount surpassed by more than 30 times the P30 billion target as demand overwhelmed both the rate setting and the public offer.

About 74 percent or P337 billion was raised during the public offer from Feb. 15 to 28. The other 26 percent or P120.8 billion was sold during the rate setting on Feb. 15.

The 27th offering of RTBs, which was priced as low as P5,000 a bid, quoted a coupon of 4.875 percent and will be issued to buyers on Friday.

According to National Treasurer Rosalia de Leon, the government needs all the financing it can borrow through RTBs to protect its cash buffer against external influences.

De Leon told The STAR earlier that the government would rely on the RTB proceeds to finance its operations in case the Ukraine conflict persists and borrowing costs increase.

“By our funding activities in the domestic space, we are shielding our debt portfolio from volatility in the global financial markets, all the while taking advantage of the commitment of the Bangko Sentral ng Pilipinas to support the country’s economic recovery,” De Leon said.

The Treasury also reported that RTBs accounted for around 35 percent of the outstanding debt securities of the government as of 2021. Last year the agency raised P463.3 billion and P360 billion from the 25th and 26th tranches of the RTBs, respectively.

Further, the Treasury generated $1.6 billion from the maiden auction of retail dollar bonds.

Meanwhile, the BTr rejected all bids for P35 billion Treasury bonds (T-bonds) as the agency turned down bids that exceeded market pricing on growing concerns over Ukraine.

Demand for T-bonds reached P46.26 billion, oversubscribing the auction by 1.32 times.

Investors flocked to the auction asking for yields ranging from 3.75 percent to 4.375 percent.

De Leon said the Treasury expects investors to seek higher rates for their bond purchases in anticipation of an inflation spike in February onward.

As Russia intensifies its attacks on Ukraine, crude rates are expected to go up worldwide, and this could impact commodity prices in the long run.

“We made a full rejection of three-year coupon setting auction as the market demands large premium to part with cash over expectation of higher inflation from spillover effects following the escalating tension in Ukraine and forthcoming Fed rate hike with 50 bps on the table,” De Leon said in a text message to reporters.

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