Government sells P20 B worth of retail T-bonds

MANILA, Philippines -  The government sold yesterday an initial P20 billion worth of retail Treasury bonds (RTBs) to investors in a rate-setting auction, marking the start of the offer period for the latest debt sale which will run until March 1.

National Treasurer Roberto Tan described the auction as “good,” saying that the government was able to sell an initial P20 billion worth of RTBs.

The five-year bonds fetched a coupon rate of six percent, which Tan said was slightly below the comparable rate in the secondary market of 6.52 percent. Investors tendered a total of P31.093 billion or more than thrice the P10 billion offered by the government for this paper.

The 10-year bonds, meanwhile, fetched a coupon rate of 7.375 percent or below 7.71 percent, the comparable rate in the secondary market.

Total bids for this paper amounted to P20 billion, twice the offer size of P10 billion for this tenor.

“It’s a very good auction. Demand is robust,” Tan told reporters after the auction.

Juanchito Dispo, executive vice-president of First Metro Investment Corp. (FMIC), one of the underwriters, said that with the “attractive rates,” demand could easily reach P80 billion.

“The rates are more attractive now compared to other RTBs. Demand can easily reach P80 billion,” Dispo said.

Joint issue coordinators for the sale are Landbank, Development Bank of the Philippines (DBP), BPI Capital Corp., Metrobank and FMIC.

He said this may even go up to as high as P100 billion as government-owned and controlled corporations (GOCCs) are expected to buy a combined amount of P20 billion.

However, Dispo stressed that it was up to the national government whether it would heed the demand and issue up to P100 billion worth of the paper.

“Let’s cross the bridge when we get there,” Dispo said.

Dispo said FMIC would recommend a daily volume of P10 billion or P5 billion for each tenor.

Furthermore, he said, FMIC would also recommend to the Bureau of the Treasury the issuance of another batch of RTBs later in the year to make it a regular program of the government.

He said the government can issue RTBs again in September or October to meet demand from retail and institutional investors.

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.