By Beatrice M. Laforga, Reporter

THE Bureau of the Treasury (BTr) will offer retail Treasury bonds (RTBs) for the second time this year to take advantage of low rates and boost state coffers for its coronavirus disease 2019 (COVID-19) response.

National Treasurer Rosalia V. de Leon on Monday said the offer period for the RTBs will start next week. The proceeds will be used to support the national budget.

“BTr will offer RTBs and [the] auction will be on July 15. We are taking advantage of low rates and provide secure investment outlets. Win-win proposition and demonstrates our solidarity against pandemic,” she told reporters via Viber.

Ms. De Leon declined to give further details about the issuance including the tenor and volume. She said additional details will be released within the week.

This will be the second time the BTr will issue RTBs this year and its 24th overall. Last February, it raised a record P310.8 billion from its sale of RTBs — comprised of P250 billion from “new money” and P60.8 billion from the exchange offer program.

These types of securities are offered to small investors as they consist of low-risk, higher-yielding savings instruments backed by the National Government.

ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa said they expect the tenor to be between three to seven years but shorter than 10 years after BTr’s sudden shift of its borrowing program for this week to 10-year Treasury bonds (T-bonds) from the initial plan to offer seven-year bonds.

“We’ve been expecting the possible issuance for an RTB for some time now given the financing requirements of the government to fund COVID-19 rescue efforts. With the bevy of liquidity and low rate environment, this was the perfect time for the government to float a retail Treasury bond to corner a good chunk of funds for its spending needs,” Mr. Mapa said in an e-mail.

Mr. Mapa said issuing the RTB on top of the planned 10-year offer on Tuesday “will put upward pressure on longer-dated yields,” while the movement of the rates for the short-term tenors will be based on inflation in June, which he sees at 2.3%.

A BusinessWorld poll of 16 economists last week yielded a median estimate of 2.2% for headline inflation in June, still slower than the 2.7% a year ago but slightly faster than the 2.1% in May.

The government borrows from domestic and foreign lenders to plug its budget deficit seen to hit 8.4% this year.

“We hope that with the government moving aggressively to secure funding, robust spending measures will be implemented to stave off a downward spiral in our economic growth trajectory,” Mr. Mapa added.

For July alone, the BTr has set a P205-billion borrowing program and will offer P145 billion in T-bills via weekly auctions and P60 billion in T-bonds to be auctioned off every other week.

In late April, the government sold $2.35 billion in dollar-denominated global bonds: $1.35 billion in 25-year bonds with a coupon of 2.95% and $1 billion via 10-year notes at 2.457%. The papers were issued on May 5.

The economy shrank 0.2% in the first quarter and is projected to slump by 2-3.4% for 2020.