Retail T-bond sale set on Feb. 26

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THE GOVERNMENT is looking to raise at least P30 billion from the sale of retail Treasury bonds (RTB) next week, the Bureau of the Treasury announced on Thursday.

In a notice posted on its Web site, the Treasury said it will offer peso-denominated five-year fixed-rate debt papers to retail investors amounting to at least P30 billion.

This is the first RTB offering of the government this year and the 22nd issuance overall, following a similar sale in June 2018 that raised some P121.765 billion ($2.31 billion) from three-year papers.

The auction and pricing of the five-year RTBs, due 2024, has been set for Feb. 26, to be immediately followed by a public offering until March 8 and issue date on March 12. The Treasury may choose to cut short the offer period and increase the offer volume as needed.

RTBs target small investors as they consist of low-risk, higher-yielding savings instruments backed by the national government. Orders for this issue will be in increments of P5,000.

This will be the fifth RTB sale under the administration of President Rodrigo R. Duterte, which has been moving to spend up to P8 trillion until 2022, when he ends his six-year term, on infrastructure development in a bid to prod gross domestic product growth to 7-8% annually till then from a 6.3% average in 2010-2016.

For the first time, the bonds can be bought online on the Web sites of Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines (DBP).

“The RTB Online Facility’s… objective is to encourage wider participation among individual investors,” the bureau said in its notice sent to agent banks that was signed by Deputy Treasurer Erwin D. Sta. Ana.

The RTB online facility will be available to existing individual peso deposit account holders of LANDBANK and DBP who have undergone the required know-your-client procedures.

To make way for the retail bond sale, the planned Treasury bill auction on Feb. 26 as well as the three-year bond auction on Feb. 27 will be cancelled.

The government raised P121.765 billion worth of RTBs last year at a 4.875% coupon. That was less than the P255.4 billion raised in the 20th RTB sale in November 2017.

National Treasurer Rosalia V. De Leon told reporters in a mobile phone message that the bond sale will help finance this year’s P3.757-trillion national budget and give “small investors access to government securities”.

The state wants to borrow P1.189 trillion in 2019 to fund its spending plans. Of the amount, 75% will be sourced domestically while the balance will be from foreign creditors.

Apart from the retail bond sale, the Treasury is also studying an offer of renminbi-denominated “panda” bonds next quarter as well as yen-denominated “samurai” bonds in the following quarter, in accordance with the government’s 12-month cycle of offshore bond offers.

The Philippines raised some $1.5 billion in 10-year dollar bonds in January, making it the first country in Asia to tap the global debt market this year. — Karl Angelo N. Vidal with Reuters