DBP, LBP named lead issuers for P70-B RTB

The Development Bank of the Philippine (DBP) and the Land Bank of the Philippines (LBP) will be the lead issuers of the estimated P70-billion retail treasury bond (RTB) in the remaining half of 2005.

The RTB will replace existing longer-dated debt instruments.

DBP president and chief executive officer Reynaldo David affirmed that the national government wants to float RTB with book-building "sometime in the last week of August."

Reports indicate that the Bangko Sentral ng Pilipinas (BSP) will soon be increasing overnight interest rates, and the RTB will be issued prior to hike.

"We have been forewarned of the plan to issue RTB to raise money before the end of the money. And yes, the DBP and the LBP will again be the selling agents," government financial officers said.

The same reports indicate that the tenor of the issues will range from three to five years. The volume of the issue is anticipated to surpass P70- billion.

National Treasurer Omar Cruz earlier confirmed the plan to float RTB and affirmed as well that the final details of the issue are still being discussed.

However, Cruz remained mum the details as "are still discussing the details of the issue."

Speculations nonetheless point to an issue before a rate hike.

With the US Federal Reserves raising the state-fund rate by another 23 basis points (bps) to 3.5 percent, the BSP may be forced to follow suit.

Bankers said that the RTB issue will not only raise funds but will in fact siphon liquidity from the system.

Market liquidity is estimated to hit P172 billion, which is currently lodged with the BSP in the form of the reverse repurchase papers. The issuance of RTB is one of several remedial measure in lieu of the inability to raise funds to fuel the budget deficit. – Ted Torres