RP raises P97 billion from retail Treasury bonds

MANILA, Philippines - The National Government limited the sale of five, seven, and 10-year retail Treasury bonds (RTBs) at P97 billion despite overwhelming demand for the debt papers, the Bureau of Treasury (BTR) reported yesterday.

National Treasurer Roberto Tan said that the government sold P85 billion worth of RTBs to small local investors as well as P12 billion worth of RTBs to government-owned and controlled-corporations (GOCCs) between Aug. 10 and Aug. 17.

“We would likely end up with P97 billion of which P85 billion is public and P12 billion in GOCCs. Orders however greatly surpassed that,” Tan revealed.

Tan reiterated the other day that the National Government has no plans to sell more than P100 billion worth of RTBs despite huge demand from investors who continue to gobble up the debt papers.

In fact, he pointed out that the treasury limited the daily sale of RTBs at P10 billion during the offering period from Aug. 10 to Aug. 17 so as not to breach the P100-billion cap.

Earlier, First Metro Investments Corp. executive vice president Juanchito Dispo revealed that underwriters and arrangers are asking the BTr to provide more supply to the market given the overwhelming demand as the order book reached P200 billion or double the maximum size of P100-billion set by the National Government.

Last Aug. 10, the BTr sold P25 billion worth of RTBs during a pricing auction. The five-year RTBs fetched 5.875 percent while the seven-year debt papers got a coupon rate of 6.625 percent and the 10-year RTBs fetched 7.250 percent.

The issuance of RTBs is part of the government’s savings mobilization program designed to make government securities available to retail investors and at the same time create savings consciousness among Filipinos. With RTBs, investors can buy the debt paper for a minimum amount of P5,000.

The new RTBs would replenish RTBs worth P75.23 billion maturing in August and September and likewise provide fresh supply in the capital market. Of the total, about P36.47-billion RTBs with a tenor of three years matured last Aug.1 while P38.76 billion worth of five-year RTBs are maturing on September 8.

Proceeds of the fresh RTB issuance would be used to finance the country’s swelling budget deficit this year.

Economic managers through the Development Budget Coordination Committee (DBCC) raised this year’s budget deficit ceiling to P325 billion or 3.9 percent of gross domestic product (GDP) instead of P293 billion or 3.5 percent of GDP. The country’s budget shortfall reached a record level of P298.5 billion or 3.9 percent of GDP last year eclipsing the previous all-time high of P210.7 billion or 5.3 percent of GDP booked in 2002.

Last year, the government sold a record level of P114.4 billion worth of three-, five-, and seven-year RTBs to small local investors, government-owned and controlled-corporations as well as government financial institutions.

Meanwhile, Tan said the government intends to slash its foreign commercial borrowings next year to $2.5 billion from about $4.1 billion this year as it expects a lower budget deficit.

He pointed out that the Philippines intends to borrow P773 billion next year of which 73 percent would be sourced from domestic creditors while 27 percent would come from foreign creditors.

“Next year, the government plans to cut overseas commercial borrowing to $2.5 billion. Government plans to borrow P773 billion next year, of which 73 percent would come from the domestic market,” Tan stressed.