THE government raised P134 billion from its 23rd offer of retail Treasury bonds (RTBs), which was met with firm demand amid strong liquidity in the market.

The Bureau of the Treasury (BTr) awarded P134 billion worth of three-year RTBs at the rate-setting auction for the papers out of total bids worth P149.827 billion. This was almost five times the initial offer of P30 billion, prompting the government to upsize the acceptance.

The papers were quoted at a coupon of 4.375%, higher compared to the 4.25% coupon fetched for the three-year RTBs issued last April 2017 or RTB 3-08 as well as the 4.274% quoted for the tenor at the close of the secondary market yesterday.

Proceeds from the issue will be used for general budgetary purposes including the state’s critical infrastructure projects and social services.

The Development Bank of the Philippines (DBP) and Land Bank of the Philippines are the joint lead managers for the 23rd RTB offering.

The two state-run banks are also part of the joint issue managers, which are BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp., PNB Capital and Investment Corp., RCBC Capital Corp. and SB Capital Investment Corp.

The three-year RTBs are now being offered to the general investing public for minimum denominations of P5,000.

Interested investors should have a peso account with selling agent banks accredited by the BTr, as they will receive quarterly interest payments and the principal amount on maturity via this account, the Treasury said.

To invest, one can approach their bank branch of choice or visit the BTr website and buy via its online ordering facility.

The public offer period is set to run until Feb. 6, unless the Treasury closes it earlier.

Following the rate-setting auction, National Treasurer Rosalia V. de Leon said yield on the RTBs is a “fair value,” given the volume of tenders and considering that the offer was to provide some incentive for them (individual and retail investors) to participate.”

“We’ll have to see first how much will be tendered, particularly for individuals because our preference is to be able to allocate to individuals and the retail (investors) which is precisely the rationale for this RTB issuance,” she told reporters.

For Carlyn Therese X. Dulay, first vice-president and head of institutional sales at Security Bank Corp., the rate set was within the market expectations while the huge amount of tenders was “indicative of how well the market supports” the issuance.

“I think 4.25%-4.375% was the range that was really given for this bond so the 4.375% is a very attractive rate but it’s still within expectations, so I think it’s positive for the market,” Ms. Dulay said in an interview after the auction.

At the same time, the BTr is also holding an exchange offer program for this issue.

Under the program, bondholders of the RTB 3-08 issued in 2017 which will mature this April can exchange these papers for this latest RTB issue for a “convenient reinvestment option for their current holdings at no cost.”

“In terms of the switch, merong cap sa (there will be a cap for the) switch, P15 billion per [working] day. [However,] we’ll just have to see first how much will be the demand for the switch but we anticipate na there will be a lot for those holding the (RTB) 3-08 in exchange for the (RTB) 23 recognizing that the coupon for this one is higher than the RTB 3-08,” Ms. De Leon said.

She, however, said the P15-billion daily cap for the switch can still be adjusted. The volume accepted per day for the switch will be determined at the end of the day.

According to Ms. De Leon, there are P180 billion worth of three-year papers maturing this April that are eligible for the exchange offer.

“P180 billion is the outstanding right now and that will mature in April so all the volume will be eligible for the switch, but per day, we cap the amount at P15 billion. But we reserve the right [to decide] how much we will accept. So we can also upsize in the same manner that we upsized in our auction today,” the Treasury official said on Tuesday.

Interested holders need to go to their broker or dealer to facilitate the submission of their offers.

“For the first time, the National Registry of Scripless Securities, through its Switch Module, will serve as the electronic platform whereby offers to exchange will be submitted, allocated and settled,” the Treasury said.

The BTr on Tuesday held a roadshow for the RTBs in Makati City and will hold additional ones in Cebu City, Davao City, Baguio City, Pampanga, South Cotabato, Bacolod City, Misamis Oriental and Iloilo City. — Beatrice M. Laforga