The government is going back to the debt market with a planned sale of retail Treasury bonds (RTBs) worth at least P30 billion, the Bureau of the Treasury (BTr) said on Thursday. It will be the second such sale of RTBs this year and the third under President Duterte, whose economic managers have crafted an ambitious infrastructure buildup program.
National Treasurer Rosalia V. de Leon said the proposed sale will tap unmet demand noted at the RTB sale in April, when Treasury officials sold only P180 billion worth of bonds, instead of the full demand estimated to have reached P500 billion.
“We accepted [only] around P180 billion [and] see that there is still a lot of appetite among the retail sector. That is also going to be a very strong, [a] huge source of funding for the government,” de Leon told financial reporters.
According to her, the proposed RTB offering has a tenor of five years and will mature in 2022, with a minimum aggregate principal amount of P30 billion.
She said investor appetite for long-dated government securities have been observed to be most acute in the three- to five-year space and this was why Treasury officials agreed to do another RTB sale.
“So we are doing this comeback of the RTB, with a five-year tenor. This is also where we see the three- to five-year appetite,” she quickly added.
The lead banks tasked with handling the planned sale include the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LandBank). China Banking Corp., BDO Unibank Inc., the Bank of the Philippine Islands and Security Bank have been appointed issue managers.
“The lead issue managers are Landbank and DBP and six who joined” issue managers, she said.
The RTB sale will help the government meet its funding requirements for next year. This was also a preemptive move and in anticipation of the interest-rate hike by the United States Federal Reserve.
“This is like a sequel, a second chance for those who weren’t able to avail [themselves of the first-time around]. And of course, if ever, we are trying to come ahead of the higher rates that we are also thinking early next year,” she added.
In May this year the government had its 19th-overall RTB sale for P30 billion, initially with a tenor of three years. In the end, the BTr sold a total P181 billion in RTBs, as the sale was 16 times oversubscribed with total tenders reaching P500 billion.
The RTBs earn a fixed interest rate based at prevailing market rates, with interest coupons paid quarterly.
The auction period will start on November 20 and the last day will be on November 29 this year. The issue date was set for December 4.