THE Bureau of the Treasury borrowed a total of P457.8 billion from small investors through offering 5-year Retail Treasury Bonds (RTBs).
The 2-week offer period for the RTBs generated nearly half-a-trillion pesos in new money on top of the P259.5 million that was raised through the bond exchange program, according to National Treasurer Rosalia V. De Leon.
The new money includes the P120.8 billion awarded during the rate-setting auction last February 15 while P337 billion was added throughout the offer period that ended last February 28.
With a coupon rate of 4.875 percent, the RTBs are set to be settled on March 4.
“By our funding activities in the domestic space, we are shielding our debt portfolio from volatility in the global financial markets; all the while taking advantage of the commitment of the Bangko Sentral ng Pilipinas for supporting the country’s economic recovery,” De Leon said in a separate statement on Tuesday.
RTB offerings have accounted for 35.2 percent of government’s outstanding debt securities in 2021.
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.
To widen the reach of RTBs to small investors, De Leon said the Treasury maximized the use of digital platforms and conducted financial literacy seminars for overseas Filipinos.
On top of launching its own mobile app last year to serve as the digital information hub of the bureau and its issuances, the Treasury is also in the final phase of developing the “FiLi” app that aims to promote financial literacy and investor education among Filipinos. The said application is web-based and will allow retail investors to identify their risk appetite, recommend a portfolio in accordance with their risk appetite as well as run simulations of possible returns based on the recommended portfolio.
T-bonds auction
THE Treasury also rejected all bids for P35-billion in new 3-year Treasury Bonds (T-bonds) it offered on Tuesday as investors continue to demand higher rates on the back of expectations of higher inflation and a looming rate hike from the US Federal Reserve.
High bids pushed the coupon for the new T-bonds to 4.375 percent, even higher than the secondary market benchmark. The auction was oversubscribed with total bids reaching P46.26 billion, exceeding the offering.
“Full rejection of 3-year coupon setting auction,” De Leon told reporters shortly after the auction. “Market demanding large premium to part with cash over expectation of higher inflation from spillover effects following escalating tension in Ukraine and forthcoming Fed rate hike with 50 [basis points] still on the table.”
This is the second day in a row this week that the Treasury fully rejected bids for government securities up for auction. On Monday, the Treasury also rejected all bids for P15 billion in T-bills.
For this month, the Treasury was hoping to borrow a total of P250 billion from the local debt market, slightly higher than the P200 billion programmed in February.