THE PHILIPPINE government on Wednesday raised $611.2 million (P34.8 billion) at an auction of its second onshore retail dollar bonds (RDBs).

Tenders at the rate-setting auction hit $636.2 million, slightly above the $636 million on offer at the Bureau of the Treasury’s first retail dollar bond sale under President Ferdinand R. Marcos, Jr.

The amount raised was higher than the minimum issue size of $200 million, but lower than the $1 billion mentioned by Finance Secretary Benjamin E. Diokno last week.

It was also below the $1.593 billion raised at the first retail dollar bond auction in 2021 under then President Rodrigo R. Duterte.

The five-and-a-half-year bonds fetched a coupon rate of 5.75%, 350 basis points (bps) higher than the 2.25% set for the 10-year retail dollar bonds and 437.5 bps higher than the five-year bonds offered in October 2021.

The debt was awarded at rates ranging from 5% to 5.75%, bringing the average to 5.509%.

While the bond sale is small compared with the $3-billion overseas notes that the government sold in January, individuals are becoming a reliable source of funding for the Philippines. The country raised P283.117 billion from the sale of peso retail bonds in February.

“The Philippines continues to enjoy a favorable credit rating, which should help with the pricing,” Nicholas Antonio T. Mapa, a senior economist at ING Bank N.V. Manila, said in a Viber message. “In the current environment with market still having ample liquidity, investors will be looking for alternative outlets to deploy funds.”

The retail dollar bonds’ coupon rate was 54.7 bps lower than the five-year debt paper quoted at 6.2967% in the secondary market on Wednesday, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

The coupon rate is still higher than the yields of the previously issued offshore dollar bonds in the secondary market, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He added that this could attract more investors, with the final amount potentially breaching the $1-billion mark that the government could try to raise.

The offer period for the dollar-denominated debt is from Sept. 27 to Oct. 6, while settlement is on Oct. 11. The bonds will mature on April 11, 2029.

Authorized selling agents for the RDBs are BDO Capital and Investment Corp., Bank of the Philippine Islands, China Banking Corp., Development Bank of the Philippines and First Metro Investment Corp. (FMIC).

Also joining them are HSBC, Metropolitan Bank and Trust Co., Philippine National bank, Security Bank Corp., Land Bank of the Philippines and Union Bank of the Philippines, Inc.

The government plans to borrow P2.208 trillion this year, consisting of P1.654 trillion from domestic and P553.5 billion from foreign sources. — Aaron Michael C. Sy