Gov't raises P457.8-B fresh debt via retail treasury bonds

MANILA, Philippines — The Philippine government announced Tuesday it borrowed a total of P457.8 billion from small investors onshore following another sale of Retail Treasury Bonds (RTB) to raise funds for the state’s ongoing pandemic response.

The offer period for the five-year bonds closed on Monday after a two-week sale that is part of the government’s plan to borrow a total of P2.2 trillion this year to bridge its large budget deficit, the Bureau of the Treasury said in a statement.

Of the total proceeds, P120.8 billion was raised during the rate-setting auction last February 15 while the remaining P337.0 billion was added throughout the offer period. Interest charged for the debt papers, as measured by a coupon rate, was set at 4.875%.

National Treasurer Rosalia De Leon said the fresh debt “will help the country respond to the challenges posed by the pandemic and will support various programs for economic resiliency and recovery.”

De Leon added that domestic borrowings will continue to corner the biggest chunk of the government’s total debt pile as local yields are expected to remain low, thanks to the central bank’s “commitment” to keep its ultra-loose monetary policy for as long as it can.

The choice to favor local sources would also “(shield) our debt portfolio from volatility in the global financial markets,” she explained. The government wants to keep foreign debts at only about 25% of its borrowing program for this year.

Already, RTBs are emerging as one of the government’s go-to sources of funds amid the pandemic. Treasury data showed RTBs accounted for 35.2% of the government’s outstanding debt securities in 2021.

At the same time, RTBs have become a popular and affordable investment vehicle for many Filipinos as the health crisis batters the economy. The latest issuance — the 27th tranche at that — was made available for as low as P5,000 through the traditional over-the-counter placement in bank branches, as well as digital channels.