Government launches P10-B T-bonds for small investors

The National Government launched yesterday this year’s first tranche of retail treasury bonds (RTBs) worth P10 billion.

The first tranche, which has a tenor of four years, hopes to raise at least P5 billion for government. The second tranche, which has a tenor of seven years, is worth another P5 billion.

Treasury bonds are government IOUs that have a maturity of more than three years. They are direct and unconditional obligations of government.

RTBs used to be called small-denominated T-bonds because the minimum investment is P5,000. To date, there have been two small-denominated bond issuances, one in 1998 which had a tenor of seven years and one last year which had a tenor of five years.

This year, the National Government has dispensed with the private sector advisor, Access Holdings, used in previous small-denominated issuances for small investors.

The Republic of the Philippines is the issue of the four-year RTBs. Lead underwriters are BDO Capital & Investment Corp., BPI Capital Corp., Development Bank of the Philippines, First Metro Investment Corp., and Land Bank of the Philippines. Each of the underwriters has made a firm commitment to take on at least P1 billion.

This early, First Metro and Land bank have also committed to underwrite the seven-year RTBs scheduled in the second half of the year. Because of their firm commitment, the two financial institutions have been named joint issue managers by government.

Although the seven-day offering period starts this Friday, the lead underwriters have already pre-sold most of the four-year RTBs to pension funds and trust funds, said DBP first senior vice-president Armando Samia.

The minimum investment for RTBs is P5,000 and the maximum investment is P2 million. Yields will be paid on a quarterly basis.