Government borrows P135 billion via fixed-rate T-notes

MANILA, Philippines — The government managed to borrow an initial P135 billion via the issuance of fixed-rate Treasury notes (FXTNs) to boost state coffers.

The Bureau of the Treasury yesterday auctioned off peso-denominated 10-year FXTNs, which are medium to long-term investments that carry minimal risk and are originally issued with tenors of three to 25 years.

With the offering, the Treasury raised an initial P135 billion after total tenders reached P197.305 billion, well above the P30-billion target offer.

The FXTN fetched a coupon rate of 6.375 percent, higher than the average rate of 6.286 percent.

The offering is intended to raise additional funding to support the implementation of the government’s budget priorities including projects and programs related to agriculture, education, health care and infrastructure development.

The 10-year FXTN is available until April 24 unless terminated earlier at the discretion of the Treasury.

The security can be purchased at a minimum of P10 million and in increments of P1 million.

The issuance through an extended public offer period format seeks to establish a benchmark-sized security, consistent with Treasury’s initiatives to enhance secondary market liquidity and price discovery of its debt instruments.

The Treasury said it also provides more flexibility for market participants to have immediate pricing guidance on the security and more time to place orders to build robust volume.

Investors are allowed to submit one bid per interest rate with a maximum volume of P10 billion. Any other subsequent bid submission at the same rate will not be accepted by the auction system.

As such, investors may submit a maximum of 10 bids at different rates capped at P10 billion per bid.

Further, interest on the FXTNs, to be calculated on a 30/360-day basis, will be paid semi-annually, in arrears, on the last day of each six-month period.

Settlement date is scheduled on April 28.