THE government sold an initial P192.71 billion in five-year retail Treasury bonds (RTBs) at a coupon of 2.625%, amid strong demand from investors.
At the rate-setting auction on Thursday, the Bureau of the Treasury (BTr) said it awarded P192.71 billion worth of RTBs, with total bids reaching P278.572 billion on the first day of the offering.
The demand was nine times more than the initial offer of P30 billion, prompting the BTr to upsize the offer for RTB-24 due 2025.
The retail bonds fetched a coupon of 2.625%, 362.5 basis points (bps) lower than the 6.25% yield when the five-year RTBs due 2024 were sold in March 2019. But this was still higher than the 2.376% rate for the tenor in the secondary market on Thursday.
This is the second time the BTr offered retail bonds this year and 24th overall. In February, the government raised a record P310.8 billion from three-year RTBs with a rate of 4.375%.
The five-year fixed-rate bonds will be offered until Aug. 7, unless the Treasury decides to close it earlier.
Following the auction, National Treasurer Rosalia V. de Leon said they will not set a target volume.
“There is already a good pick up with a 2.625% coupon and results in real positive yield. Online ordering platforms and mobile apps will allow us to reach far and wide small investors in this environment of safe distancing and quarantines,” Ms. De Leon told reporters via Viber.
Aside from participating banks, the BTr also opened more online channels to offer the RTBs such as the online ordering facility on its website and the new Bonds.ph mobile application.
Ms. De Leon also clarified the awarded bonds were all “new money,” and no swap offers were accepted yet for the exchange offer program wherein bondholders of the RTB 10-01, FXTN 05-73, RTB 10-02 or FXTN 07-57, can swap the old papers for the new RTB.
Meanwhile, a bond trader said the huge demand for RTBs was due to the strong liquidity in the market.
“(The rates are) attractive enough for investors, BTr got the volume they need and (has a) chance to do more. That was a great auction, attractive for retail clients,” the trader added.
RTBs, which were offered in denominations of P5,000, are deemed as low-risk instruments with relatively high yields.
The retail bonds will be issued on Aug. 12 and mature on Aug. 12, 2025. The papers will be listed on the Philippine Dealing and Exchange Corp. (PDEx).
In a statement on Thursday, Land Bank of the Philippines (LANDBANK) said the proceeds of the fundraising activity will support the National Government’s efforts to respond to the coronavirus disease 2019 (COVID-19) pandemic.
“LANDBANK’s participation in the RTB-24 or Progreso Bonds offering is a testament to the Bank’s unwavering support to the National Government to raise funds for its socioeconomic development initiatives. Rest assured that the Bank will do its part to promote and encourage retail investors to invest in the Progreso Bonds,” LANDBANK President and CEO Cecilia C. Borromeo was quoted as saying.
LANDBANK and the Development Bank of the Philippines (DBP) acted as the joint lead issue managers for the transaction.
The joint issue managers were LANDBANK, DBP, BDO Capital and Investment Corp., Bank of the Philippine Islands, Capital Corp., China Bank Capital, First Metro Investment Corp., Philippine National Bank Capital and Investment Corp., Rizal Commercial Banking Capital Corp., SB Capital Corp., and UnionBank. — Beatrice M. Laforga