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Retail T-bond sales hit all-time high

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PESO_081617 -- REUTERS
A worker shows Philippine peso bills inside a money changer in metro Manila on August 14, 2017. -- REUTERS

By Beatrice M. Laforga, Reporter

The government raised a record P516.3 billion from the sale of retail Treasury bonds (RTBs) amid strong market liquidity and a boost from online sales.

The Bureau of the Treasury (BTr) raised P488.5 billion in fresh funds or “new money” via the five-year RTBs while the P27.8 billion were from switch subscriptions, said National Treasurer Rosalia V. de Leon.

“We have closed the offer period of the RTB 24 today (Friday). Strong market liquidity conditions supported healthy demand for the RTBs,” Ms. de Leon told reporters.

Proceeds of the fundraising activity will be used to beef up state’s coffers as coronavirus pandemic-related expenses rise and tax collections fall amid the downturn.

Ms. de Leon said they also saw a boost from online sales after launching the Bonds.PH mobile application, where 80% of more than 2,500 transactions were done by retail clients, investing P10,000 or less.

The mobile application had nearly 25,000 downloads from 85 countries, she said.

“Market liquidity, great timing and our attractive interest rate were the drivers of success for this year’s offering of RTBs. As our economy expands and more people become financially capable to save, it is rewarding for the BTr to see a wider set of the public put their trust in our almost annual fund raising exercise,” Ms. de Leon added.

The public offer period for the retail bonds ran for three weeks. The volume sold set a new record high only one week into the period, beating the P310.8 billion raised in three-year RTBs in February.

In the first day of sale during the rate setting auction in mid July, the initial sales of the five-year RTBs already hit P192.71 billion.

RTBs target small investors because these are deemed as low-risk assets with relatively high returns.

The bonds, sold in denominations of P5,000, carry a coupon of 2.625%, and will be issued on Wednesday, Aug. 12. The debt papers will mature on Aug. 12, 2025. It will be listed on the Philippine Dealing and Exchange Corp.

State-run lenders Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP) are the joint lead issue managers for the transaction.

The joint issue managers are LANDBANK, DBP, BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp., PNB Capital and Investment Corp., RCBC Capital Corp., SB Capital Corp. and UnionBank of the Philippines, Inc.

In the first half, the BTr’s gross borrowings hit P1.7 trillion, already surpassing the P1.02 trillion raised last year.

The government is eyeing to borrow P3 trillion this year to plug the budget deficit seen to widen to 9.6% of gross domestic product (GDP) as pandemic expenses rise while revenues remained weak.

It also planned a borrowing program of P3 trillion next year.

The economy is expected to slump by 5.5% this year.





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