Government eyes retail dollar bond offer by year-end

MANILA, Philippines — The Bureau of the Treasury (BTr) is considering a retail dollar bond offering before year-end as the government looks to tap domestic investors for its financing needs.

National Treasurer Sharon Almanza said the government is still exploring a new issuance of retail dollar bonds (RDBs), or dollar-denominated government securities, that allow individual investors to lend to the state and earn interest in dollars.

During a media briefing, Almanza said an RDB issuance remains on the table and is being studied with the government’s investment banks.

Asked afterward whether an RDB could be issued as early as next month, Almanza said: “It’s possible.”

She said the timing would depend on “market conditions,” while noting that the Treasury has yet to determine how much it could raise from the potential offering.

The potential issuance will come as the government enters the final quarter with a substantially larger domestic borrowing program.

The national government plans to raise P892 billion from the local debt market in the fourth quarter, more than double the P437 billion programmed in the same period last year.

Almanza earlier said the sharp year-on-year increase partly reflected the timing of government borrowing.

Last year, the Treasury front-loaded more of its financing requirements in the first three quarters, leaving fewer bond auctions toward year-end.

This year, the government has spread out its borrowing amid a more uncertain market environment and is watching for opportunities to take advantage of any decline in interest rates later in the year.

The RDB, if it pushes through, would be counted as part of domestic borrowing even though the securities are denominated in dollars, Almanza said. The classification reflects the source of financing rather than the currency in which the bonds are issued.

The potential RDB issuance will follow the government’s latest peso-denominated retail Treasury bond offering launched on Sept. 29.

The BTr raised an initial P84.886 billion from the rate-setting auction for the 2.5-year RTB 32 after total tenders reached P188.637 billion, more than six times the P30-billion original offer.

The securities were priced at a coupon rate of 6.875 percent, with the government targeting around P150 billion in fresh funds from the offering, excluding bonds tendered through the exchange component.

Almanza said the Treasury continues to weigh financing costs and investor demand in deciding the timing and structure of its remaining issuances for the year.