Gov't eyes P40B from retail T-bonds

MANILA, Philippines - The government is set to raise at least P40 billion from the sale of retail Treasury bonds (RTBs) to small local investors as well as institutional investors starting Feb. 21 to pay off maturing obligations.

Deputy national treasurer Eduardo Mendiola told reporters that the government would sell at least P20 billion worth of 15-year RTBs and at least P20 billion worth of 20-year RTBs from Feb. 21 to Feb. 28.

Mendiola said the Bureau of Treasury would likely mandate nine local banks as selling agents for the government’s first RTB offering this year.

The selling agents to be appointed include First Metro Investments Corp., BDO Capital, BPI Capital, Metrobank Group, China Banking Corp., Deutsche Bank, Land Bank of the Philippines, Philippine National Bank, and Development Bank of the Philippines.

Earlier, National Treasurer Roberto Tan said the government intends to sell RTBs to raise funds to finance P80 billion worth of maturing financial obligations.

Tan also said earlier that the BTr is looking at selling RTBs at least twice a year to satisfy the needs of small local investors.

Last year, the BSP sold P214 billion worth of RTBs. It sold P110 billion worth of 10-year and 15-year RTBs last October and P104 billion worth of five- and 10-year RTBs last March.

Last month, the Bangko Sentral ng Pilipinas (BSP) gave the government the greenlight to issue up to P500 billion worth of debt in the domestic market to take advantage of the low interest rates as well as the strong liquidity in the domestic financial system.

Monetary authorities believe that it would be practical for the government as well as the corporate sector to tap the domestic market for fresh funds as the financial system is awash with liquidity including the funds parked at the vault of the BSP in the form of special deposit accounts (SDAs) amounting to about P1. 6 trillion.

Likewise, the government should also take advantage of the country’s low interest rate regime.

The Philippines borrows heavily from domestic and foreign creditors to trim its budget deficit. The government hopes to trim the budget gap this year to P279 billion from about P300 billion last year.