THE PHILIPPINE government on Tuesday raised an initial P113.545 billion in five-and-a-half-year retail Treasury bonds (RTBs), as it seeks more funds for its post-pandemic recovery measures.   

At the rate-setting auction, tenders reached P165.033 billion, more than five times the initial offer of P30 billion.

The retail Treasury bonds fetched a coupon rate of 4.625%. This is slightly lower than the 4.750% coupon rate for the recently re-issued Treasury bonds that are also set to fall due in 2027.

The RTBs’ coupon rate is within the range seen at the secondary market on Monday, in which five- and seven-year papers were quoted at 4.2135% and 4.6631%, respectively, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

“RTB attracted strong demand with tucked-in premium over secondaries in consideration of larger volume and expectation of rates climbing up as era of loose monetary policies comes to a close starting with Fed taper announcement,” National Treasurer Rosalia V. de Leon said via Viber.

The US Federal Reserve recently announced the start of the reduction of its $120-billion monthly asset purchases at $15 billion per month.

The proceeds from the RTBs will fund the government budget, Ms. De Leon added.

The RTBs are targeted for small investors that want low-risk, higher-yielding savings instruments backed by the National Government.

The five-and-a-half-year bonds are being sold in denominations of at least P5,000, and in multiples of P5,000 thereafter.

The BTr also opened a bond exchange offer where holders of fixed-rate Treasury notes maturing in 2022 can swap their holdings for the new RTBs. The minimum exchange offer is P5,000.

The offer period is set to run until Nov. 26, unless the Bureau of the Treasury (BTr) closes the offer early. The papers will be issued on Dec. 2.

The RTBs’ maturity date is on June 2, 2027.

This is the government’s second RTB offering of the year. However, the BTr sold less on Tuesday compared with the three-year RTBs sold in February.

In February, the government accepted an initial P221.2 billion and ended up selling P463.3 billion at the end of the offer period, making it the second-biggest RTB sale after the record P516.3 billion sold in five-year bonds in 2020.

Issue managers for the latest RTBs include the Land Bank of the Philippines (LANDBANK), Development Bank of the Philippines (DBP), BDO Capital and Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp. (FMIC), PNB Capital and Investment Corp., and UnionBank of the Philippines, Inc. (UnionBank).

Authorized selling agents for the bonds are BDO Unibank, Inc., Bank of Commerce, BDO Capital, BPI Capital, China Banking Corp., DBP, East West Banking Corp., FMIC, ING Bank, LANDBANK, Metropolitan Bank & Trust Co., Philippine Bank of Communications, Philippine National Bank, Rizal Commercial Banking Corp., Standard Chartered Bank, and UnionBank.

The government wants to borrow P3 trillion from local and external sources this year to help fund a budget deficit seen to hit 9.3% of gross domestic product. — Jenina P. Ibañez