Retail dollar bond offering eyed before end of the year

THE BUREAU of the Treasury (BTr) will likely launch its maiden issuance of retail dollar bonds (RDBs) later this year, as the capital region remains under the strictest form of lockdown.

“[The issuance is] not postponed since we have not officially set a launch date. Of course, plan is to do it this year,” National Treasurer Rosalia V. de Leon told reporters via Viber on Monday.

The Treasury in July revealed plans to launch its first-ever retail dollar-denominated bond offering by mid-August as the government seeks to raise more funds amid the pandemic.

Ms. De Leon said the BTr can no longer offer RDBs this month and will need to adjust its timetable to reassess market developments, particularly the reimposition of an enhanced community quarantine (ECQ) in Metro Manila and other provinces.

The government placed the National Capital Region, Laguna, Iloilo City, Cagayan de Oro and Gingoog City in Misamis Oriental under ECQ for two weeks until Aug. 20. Restrictions in most parts of the country have been tightened as well to curb the spread of the Delta variant of the coronavirus disease 2019 (COVID-19).

For now, Ms. De Leon declined to give a firm timetable on when the RDBs will be launched this year.

The country’s onshore RDBs aim to provide safe investment opportunities for retail investors, especially overseas Filipino workers (OFWs), with a minimum investment of $300 (P15,000) and higher-than-market rates.

The government and its partner banks have adopted more ways to attract small investors to participate in the RDB offering, by removing the maintaining balance of dollar accounts that will be used to buy the securities.

The Department of Finance (DoF) said in a press release on Monday that several unnamed banks agreed to lower the minimum initial deposit and average daily balance requirement to zero for dollar accountholders who will buy RDBs, citing a report from the BTr.

Prior to this, depositors were required to have a balance of at least $500-$1,000 in their dollar accounts before they could invest.

The BTr said investors can buy the bonds by either using their dollar accounts with participating banks, or through the PesoClear option where holders of peso bank accounts can buy RDBs at their peso value based on the current exchange rates.

“During the life of the RDBs, the investor’s settlement bank will automatically convert the quarterly interest payments and principal repayment at maturity into pesos and credit these to the Philippine account of the investor, all at the market exchange rate during the transactions,” the Treasury said.

The bonds can be purchased through various online channels like the BTr’s online ordering facility, Bonds.PH mobile app, and the Overseas Filipino Bank (OFBank) mobile app. Opening dollar accounts can also be done online, according to the BTr.

The Treasury hosted several financial literacy webinars for OFWs in 20 countries to promote the RDBs.

The last time the BTr offered onshore dollar-denominated bonds was in December 2012, when it raised $500 million in 10.5-year bonds from $1.7 billion in total tenders. The issuance, however, was only available to institutional investors due to high minimum investment requirement.

Similar to the RDB is the peso-denominated retail Treasury bonds (RTBs) that the government offers each year to attract retail investments to invest in safe assets at relatively higher rates.

In March, the BTr raised P463.3 billion in three-year RTBs to mark its second-biggest retail bond sale in history, following the record P516.3 billion sold in five-year papers last year.

The government aims to raise P3 trillion from local and foreign lenders this year to plug the budget deficit seen to widen to 9.3% of gross domestic product. — B.M.Laforga