THE Marcos Jr. administration plans to raise at least $200 million from its first sale of retail dollar bonds (RDBs)—the second for the Philippines—to meet the state’s financing needs.
The Bureau of the Treasury (BTr) issued a notice of offering on Tuesday for the country’s issuance of 5.5-year RDBs due 2029. The Treasury disclosed that its minimum target amount is set at $200 million.
Finance officials have earlier disclosed that the national government is eyeing to raise at least $1 billion from the second round of RDBs to be offered by the country.
In its maiden sale of RDBs in October 2021, the Philippines raised a total of $1.593 billion, almost four times bigger than its initial target amount.
The Treasury has scheduled the auction date and start of public offer for the RDBs on September 27. The public offer would end on October 6 with the issue date scheduled on October 11, according to the notice of offering.
“The Republic, through the BTr, reserves the right to revise the timetable and other mechanics of the issue before the Auction Date,” read the notice published on Monday.
In the past five days, the Treasury has been teasing to the public the second RDB offering on its Facebook page, garnering thousands of reactions, shares and comments from interested investors.
Interested investors can purchase the RDBs at a minimum amount of $200 in increments of $100. The Treasury said the interest rate will be a fixed rate based on the prevailing 5.5-year Republic of the Philippines (ROP) bond yields.
Michael L. Ricafort, Chief Economist at Rizal Banking Commercial Corp., said the rates for the RDBs could settle around 5.2 percent to 5.5 percent in line with the prevailing rates of bonds with nearly similar maturity dates as the RDBs.
Ricafort noted that the dollar-denominated ROP bond due January 14, 2029 has a yield-to-maturity of 5.24 percent while another batch maturing on February 2, 2030 is now at 5.46-percent yield-to-maturity.
Ricafort is optimistic that the RDBs would be met with a “strong demand” as the minimal investment requirement with “higher interest rates” would be “attractive” to retail investors.
“The relatively higher interest rates/yields for the US$ RDBs could be attractive for retail investors, with a minimum investment of US$200 and increments of US$100, and could lead to strong demand given the low minimum amount to enjoy the higher interest rates, especially if the investors hold the bonds until maturity to prevent market risk and enjoy the relatively higher coupon/interest rate income,” he told the BusinessMirror in an e-mail interview.
“The comparable US Treasury yields already hovered among 16-year highs or since August 2007, thereby providing higher yields/coupon for investors,” he added.
The RDBs would also be tax-free as the national government would shoulder the taxation involved in the issuance of the debt papers. The RDBs will also yield quarterly coupon dividends.
National Treasurer-OIC Sharon Almanza said the national government will not exceed its full-year programmed borrowing of P2.207 trillion. Almanza explained that the RDBs would be counted as part of the domestic borrowings of the state, which has been lagging behind in terms of its programmed amount.
Almanza added that the Treasury will adjust its domestic borrowings, either by reducing the amount per tender or reducing the number of its remaining auctions of peso-denominated government securities, should the amount raised by the national government through the RDBs exceed the state’s initial expectations.
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