THE Bureau of the Treasury sold an initial P120.76 billion in its latest offering of 5-year Retail Treasury Bonds (RTBs) as the market hedges against a potential interest rate hike from the US Federal Reserve next month.
The latest RTB offering fetched an annual interest rate of 4.875 percent during its rate-setting auction on Tuesday.
Total bids for the RTBs reached P183.44 billion, making the auction six-times oversubscribed.
National Treasurer Rosalia V. De Leon told reporters the auction showed strong interest in RTBs. De Leon added that the “coupon penciled in rate liftoff and emerging higher inflation risk.”
The US inflation rate in January, which notched a fresh 4-decade-high at 7.5 percent, is fueling speculations that the Federal Reserve will raise interest rates by 50 basis points in its March meeting to address the spike in prices.
During the launch of the 27th RTB offering on Tuesday, De Leon also said in her speech that the government is aiming to raise P2.2 trillion, of which around 75 percent will be sourced from the domestic market.
“In addition to financing the government’s resilience and emergency programs, the funds will also be used to continue the trajectory of the massive infrastructure push of our ‘Build, Build, Build’ program aimed at maximizing economic efficiency and contribute to achieving GDP [gross domestic product] growth of 7 percent to 9 percent,” the Treasurer said.
De Leon also said the Treasury will also be launching in a few weeks its own financial planning application that aims to make investment tools readily available to those who are keen on fulfilling their financial goals.
The national government has been issuing RTBs since 2001 as part of its efforts to support financial inclusion and literacy among Filipinos. Last year, the government raised over P800 billion from the sale of RTBs.
De Leon said RTBs now account for over 30 percent of the government’s outstanding securities.
Generally considered low-risk investment instruments, RTBs allow investors to earn a fixed interest based on prevailing market rates that are paid quarterly during the term of the bond.
The latest RTB offering, which is set to mature on March 4, 2027, is made available to retail investors in minimum denominations of P5,000.
Eligible investors for the RTBs may include individuals, cooperatives, retirement funds, and provident funds. For the holders of maturing debt papers (FXTN 20-02 and FXTN 3-24), they may also swap these with the latest RTBs.
The public offer period for the RTBs that started last Tuesday would end on February 28.
Interested retail investors may purchase the RTBs via over-the-counter or traditional channels through the branches of the selling agents, via online channels through the RTB ordering facility, which can be accessed through the Treasury website or through the mobile applications of Land Bank of the Philippines and the Overseas Filipino Bank or the Bonds.PH app.
The joint lead issue managers for the latest RTB offering are Development Bank of the Philippines and LandBank while the joint issue managers are BDO Capital & Investment Corp.; BPI Capital Corp.; China Bank Capital Corp.; First Metro Investment Corp.; SB Capital Investment Corp. and UnionBank of the Philippines.