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P163B raised from 1st Marcos RTBs

A Philippines peso note is seen in this illustration on June 2, 2017. — REUTERS/THOMAS WHITE/ILLUSTRATION

By Diego Gabriel C. Robles

THE PHILIPPINE government on Tuesday raised an initial P162.72 billion in an auction of retail Treasury bonds (RTBs), the first under the Marcos administration.

Tenders at the rate-setting auction reached P225.32 billion, or more than seven times the P30 billion on offer at the Bureau of the Treasury’s (BTr) second retail bond offer this year, as investors sought safe-haven investments.

The five-and-a-half-year RTBs fetched a coupon rate of 5.75%, higher than the 4.875% set for similar five-year bonds in March.

The RTBs’ coupon rate is also higher than the five-year debt papers quoted at 5.4337% in the secondary market, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

“This issuance serves as an important component of the National Government’s fundraising efforts to finance our development programs aimed at building a sustainable, inclusive, and broad-based economy,” Finance Secretary Benjamin E. Diokno said at the launch of the 28th tranche of RTBs on Tuesday. 

In a Viber message to reporters, National Treasurer Rosalia V. de Leon said the auction results “already showed strong interest” from investors.

The public offering for today (Aug. 24) has been canceled in view of the suspension of government work due to severe tropical storm Florita. It will resume on Thursday (Aug. 25), according to the BTr.

The RTBs target small investors who want low-risk, higher-yielding savings instruments backed by the National Government.

Mr. Diokno said these investment instruments “allow Filipinos to contribute to nation-building while growing their hard-earned savings with better returns.”

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

Holders of fixed-rate Treasury notes maturing on Sept. 13, Dec. 4, Dec. 6, and Feb. 11 of next year can swap their holdings for the RTBs, the Treasury said. The minimum exchange offer is P5,000.

The offer period for the peso-denominated debt is from Aug. 23 to Sept. 2, while settlement is on Sept. 7.

The RTBs’ maturity date is on March 7, 2028.

“The coupon is attractive enough for end-user clients and general public who wish to contribute to nation-building by investing in the RTB,” the first trader said, noting that the strong demand was evident.

“As anticipated, the RTB offering of the government is a big hit even as it’s just the price-setting date and the start of the offer period. This is a great outlet for new and existing investors that seek a safe investment with a higher yield vis-a-vis most banks’ deposit rates,” the second trader said.

Rising inflation prompted the Bangko Sentral ng Pilipinas (BSP) to tighten monetary policy. It has raised policy rates by a total of 175 basis points since May this year.

The government, then under the Duterte administration, raised P457.8 billion from the issuance of five-year RTBs in March. The RTBs had a coupon rate of 4.875%. Of the total amount, P457.4 billion raised was fresh funds or “new money,” while the remaining P259.5 million was from the bond exchange program.

Since the first issuance of RTBs in 2001, the government has generated P4.37 trillion from the bond offerings.

“Our growing retail sector is proof that the retail Treasury bonds are a viable pillar of domestic financing. With their consistently strong reception from both local and overseas investors, the retail Treasury bonds now account for around 35% of the Bureau of the Treasury’s outstanding government securities,” Mr. Diokno said.

Aside from the traditional over-the-counter transaction, the new RTBs may be purchased through the Online Ordering Facility of the BTr website and settled via electronic payment facilities of China Banking Corp., First Metro Securities Brokerage Corp., the Development Bank of the Philippines (DBP), and Land Bank of the Philippines (LANDBANK).

A mobile application by the BTr is also available in the App Store and Google Play Store.

RTBs can also be purchased through the mobile app of UnionBank of the Philippines (UnionBank); OFB mobile banking app of the Overseas Filipino Bank (OFB); and the LANDBANK mobile banking app.

“Through these innovations, overseas Filipinos from over 41 countries contributed to the success of the last retail treasury bond tranche. We will continue to develop these platforms and harness current technologies, such as blockchain, to strengthen the efficiency and inclusivity of the government’s securities market,” Mr. Diokno said.

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

Authorized selling agents for the bonds are Asia United Bank, BDO Unibank, Inc., BDO Capital & Investment Corp., Bank of Commerce, BPI Capital Corp., China Banking Corp., Citibank N.A., DBP, East West Banking Corp., FMIC, ING Bank NV, LANDBANK, Maybank Philippines, Inc., Metropolitan Bank & Trust Co., Philippine Bank of Communications, Philippine National Bank, Rizal Commercial Banking Corp., Robinsons Bank Corp., Security Bank and Trust Co., Standard Chartered Bank, and UnionBank.

Sponsoring Government Securities Eligible Dealers (GSED) are the China Banking Corp., DBP, First Metro Securities Brokerage Corp. on behalf of Metropolitan Bank & Trust Co., LANDBANK, and UnionBank.

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