Government to raise P30 billion from retail T-bonds

MANILA, Philippines — The government will issue P30 billion worth of three-year retail treasury bonds (RTBs) to raise new funds and refinance maturing debt, according to the Bureau of the Treasury (BTr).

In an advisory posted on its website, the Treasury said it would offer peso-denominated fixed-rate RTBs due 2023, with a minimum aggregate amount of P30 billion.

The BTr said this tranche of RTB issuance would have a switch tender component, as holders of RTB 3-08, which are set to mature on April 11, may exchange their old debt notes for the new RTBs. The old securities carry an interest rate of 4.25 percent.

 “The purpose of the invitation is to present a reinvestment opportunity for holders of the eligible bond given its forthcoming maturity date. The exchange offer is also intended to manage refinancing risk in the debt portfolio of the Republic and is an integral part of its overall liability management program,” the Treasury said.

The price-setting auction for the debt papers is scheduled on Jan. 28. The public offer period will also start on the same date, and end on Feb. 6, while the settlement will be on Feb. 11.

According to the BTr, dealers would be allowed to place a maximum of 10 bids at different rates for a maximum of P10 billion per bid.

Dealers who have successfully placed bids for a minimum principal amount of P500 million may qualify as selling agents.

Retail investors may buy RTBs during the offering period in minimum denominations of P5,000 and integral multiples thereof.

Meanwhile, exchange offers shall be in the minimum amount of P5,000 in multiples of P0.01.

The BTr will also continue to use its online ordering facility for this tranche of RTB offering.

The national government borrows from both domestic and foreign lenders to plug its fiscal deficit, which is programmed at 3.2 percent of the gross domestic product for 2019. 

This would be the 23rd retail bond offering of the government and the first within the year.

The last time the government issued retail securities was in March last year.

During the previous fund raising activity, the Treasury was able to raise a total of P235.83 billion from the sale of five-year RTBs at a coupon rate of 6.25 percent. This was almost eight times higher than the P30 billion initial volume for the offering.

For 2020, the government is planning to ramp up its borrowings to P1.4 trillion, 17.6 percent higher than the P1.19 trillion borrowing program for the current year. The borrowing mix for next year is set at 75:25, with P1.047 trillion sourced locally and P353.2 billion from foreign creditors.