The initial auction for the state’s second RDB offering last Wednesday, the first under the Marcos Jr. administration, fetched a total of $636.2 million bids from investors, according to data from the Bureau of the Treasury (BTr).
However, the Treasury only accepted $611.2 million, or about 96 percent of the initial total tender as yields averaged 5.509 percent, slightly higher than the 5.32-percent secondary market benchmark rate.
The 5.5-year RDB tender by the Treasury set a coupon rate of 5.75 percent while investors’ asking rates ranged from 5 percent to 5.75 percent.
The auction for the RDB, which will mature by 2029, would run until October 6 with issuance date scheduled on October 11, according to the Treasury’s notice.
The Treasury said the selling agents for the RDB are BDO Capital and Investment Corp., Bank of the Philippine Islands, China Banking Corp., Development Bank of the Philippines, and First Metro Investment Corp. The other agents are also Hongkong and Shanghai Banking Corp. Ltd., Metropolitan Bank & Trust Company, Philippine National Bank, Security Bank Corp., Land Bank of the Philippines and Union Bank of the Philippines.
Finance officials said the national government is targeting 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.
Michael L. Ricafort, Chief Economist at Rizal Banking Commercial Corp., had said the rates for the RDBs could settle at 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 is optimistic that the RDBs would be met with “strong demand” as the minimal investment requirement with “higher interest rates” would be “attractive” to retail investors.
Interested investors can purchase the RDBs at a minimum amount of $200 in increments of $100.
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.
Image credits: Walter Eric Sy / Dreamstime.com
