BTr awards P113.772 billion for 5-year RTBs amid strong appetite for government security

The Bureau of the Treasury (BTr) has awarded P113.772 billion for five-year retail treasury bonds (RTBs), which is four times oversubscribed from the initial offering of P30 billion with market investors showing strong appetite for the government security.

National Treasurer Rosalia V. de Leon told financial reporters that the auction committee is pleased with the turnout of the RTB rate setting auction on Monday, as it was able to award P113.772 billion higher than what was initially offered at P30 billion.

“We are extremely pleased with the results of the auction today [Monday]. So we have upsized the offering to P120 billion from P30 billion, so that’s almost four times the rate we expect…So it’s a coupon setting exercise, so 6.25 percent, we see that investors view this as what we call a last call to be able to get this good rates because of the expectations that eventually rates will be trending downward with inflation expectations also to continue to decline. And particularly with the two bills that were passed by the administration, the rice tariffication and the amendments to the Central Bank Act,” de Leon said.

The coupon rate for the IOU was set at 6.250 percent, with tenders amounting to as much as P121.807 billion.

De Leon explained that the passage of the rice tariffication bill and the amended central bank charter was taken as positive move by investors as this is seen to help ease inflation further.

“And based on our initial survey, they view that inflation might really be settling [at] around the 4 percent area…It really shows that we will be in the path of 2 percent to 4 percent inflation and within the target of the BSP [Bangko Sentral ng Pilipinas] within the year,” she added.

Last week, the BTr announced that it will be offering five-year RTB on February 26, as part of the government’s funding exercise for the year with an initial offering of P30 billion.

“Based on the feedback, we can reach P200 billion but I don’t think we will really be availing that much from these offering…so we’ll see first from the demand because we also want to get more from this exercise the retail and individual investors…In the past we averaged about 10 percent to 20 percent of individuals, so hopefully with the online ordering platform that we have now, it can only be accessed by LandBank [Land Bank of the Philippines] and DBP [Development Bank of the Philippines] depositors because the rest of the other banks are not yet ready with their system,” she said.

The offer period for the security starts on February 26 and ends on March 8. RTBs are made available to small investors for a minimum denominations of P5,000. RTB tranche 22 will mature in the year 2024.

Proceeds from the issuance of RTBs will form part of the Philippine government’s fund raising efforts for its health services, educational programs, and public infrastructure.

The online RTB ordering platform is available to those who have peso accounts with the LandBank and the DBP who are the Joint Lead Issue Managers for the 22nd RTB offering.

They are joined by BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp., RCBC Capital Corp., and SB Capital Investment Corp. as joint issue managers.

De Leon also said that a Philippine Economic Briefing (PEB) will be held in Beijing, China on March 20 in preparation for the country’s Panda bond issuance for this year.

“We will also be doing a nondeal roadshow in China in preparation for our Panda (bond issuance) on March 20 in Beijing. Beijing for the PEB, but for the nondeal we will also be looking to the other regions…,” she added.

In May 2018, the Treasury awarded P66 billion in its initial auction for 3-year RTBs from the P30 billion on offer, at a coupon rate of 4.875 percent, on the back of a very liquid system.

De Leon said that the auction committee is pleased with the turnout of the first-day auction for the 21st RTB, as tenders rose to P92.788 billion, prompting the Treasury to award P66 billion from the P30 billion on offer at a coupon rate of 4.875 percent.

At the end of the offer period on June 8, the BTr issued a total of P121.8 billion for the 3-year RTB.

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