Government to push SDT bond offering

The National Government is pushing through with the offering of the third tranche of its small denominated treasury (SDT) bonds this year or early next year.

Sources privy to the proposed bond float told The STAR that the government met with lead underwriters last week to discuss the details of the proposed P5 billion bond float.

The sources said this time, the government wants to lengthen the maturity of the SDT to seven years from the previous first two offerings with a maturity period of only five years.

"The government wants a long term maturity treasury bonds at the same time develop the market for this type of maturity," they said.

The National Government will offer some P50 billion worth of SDTs. Of this amount, about P30 billion has been offered earlier to the public. The additional P5 billion offering will bring to P35 billion the total SDT float.

The sources said the Department of Finance (DOF) has decided to combine the underwriters of the SDT and the PROgress Bonds.

"Some of the SDT underwriters suffered financial conditions such as the All Asia Capital Corp. and Westmont Capital. So they decided to get the underwriters of PROgress bonds to join in the offering of SDT," they said.

They said with this move, First Metro Capital, Equitable PCIBank Capital and BPI Capital, which are underweriters of PROgress bonds, will join the Land Bank of the Philippines and Banco De Oro in selling the third tranche of SDTs.

Just like the previous two offerings, the third SDT offering wil go through the same process of institutional book building first before it would be offered to retail buyers.

Despite the longer maturity, the latest SDT offering will still carry a market-based interest rate.

Sources said there are still market for this kind of products since there are companies that need long-term investments like this.

"Trust, insurance companies and certain funds are still interested in buying such products," sources said.

SDT carries similar features as the fixed rate treasury notes offered by the Bureau of Treasury while the PROgress bonds give investors a chance to exchange their bond holdings into shares in any government firms up for privatization.