THE Bureau of the Treasury raised on Wednesday an initial $866.2 million (P43 billion) during its rate-setting auction for its first-ever Retail Onshore Dollar Bonds (RDBs).
The amount awarded was also an upsize from the initial total offer of $400 million for the five-year and 10-year tenors.
The auction was more than twice oversubscribed, with total bids for the US-dollar denominated instruments amounting to $938.2 million.
Broken down, the Treasury awarded $551.8 million for the 5-year RDBs and another $314.4 million for the 10-year tenor.
During the auction, the 5-year and 10-year tenors fetched coupon rates of 1.375 percent and 2.25 percent, respectively.
National Treasurer Rosalia V. de Leon expressed satisfaction with the auction results, saying they hope to see the same level of demand for the RDBs for the rest of the offer period which is set to end on October 1.
De Leon also said they expect more onshore retail investors for this offering.
“[I am] happy with results of maiden offering for RDB. Rates reflect various consideration for pricing including performance of ROPs [US-dollar denominated bond issued by the Philippine government], liquidity and worries on US rates liftoff,” de Leon told reporters in a message.
Asked whether the Treasury will shorten the offer period once it reaches its target amount, de Leon said they need two weeks “to throw the net far and wide to catch more.”
However, de Leon did not say how much they are targeting to raise with its sale of RDBs.
Proceeds from the sale of RDBs will be used to fund the government’s Covid-19 recovery and resilience programs.
RDBs ’win-win’—Dominguez
FOR his part, Finance Secretary Carlos G. Dominguez III urged the public to invest their savings in RDBs, which he called a “win-win proposition.”
“Retail dollar bonds provide a safe investment and income opportunity. Buying them will help raise funds for our economic investments and the nation’s comprehensive effort to defeat the pandemic,” Dominguez said in his pre-recorded speech during the investor briefing on RDBs also on Wednesday.
“This helps open up the financial system to small investors and encourages more efficient intermediation. Overall, this aids in restoring the vigor of the Philippine economy at the soonest possible time,” he added.
At a minimum placement of just $300 (P15,000), the RDBs are seen to be far more accessible than the traditional US dollar-denominated global bonds issued by the Philippine government which require a minimum subscription of $200,000.
Apart from the minimum investment of $300, the Treasury said investors will get to enjoy full coupon payments as the final withholding tax on interest to be assumed by the Philippine government. On top of relatively higher returns, RDBs are expected to attract US dollar earners as the structure mitigates foreign exchange risk on the part of investors by maintaining the original currency of their investment.
The Treasury said investors can choose whether to do a straight USD placement or through PesoClear, wherein cash flows in RDBs are paid and received by an investor in PHP with the currency conversions done by the selling agent bank.
The Retail Onshore Dollar Bonds shall be sold during the public period in minimum denominations of $300 and multiples of $100 dollars thereafter.
For those interested to invest in Retail Onshore Dollar Bonds, they may purchase via an over-the-counter facility, the Bureau of the Treasury’s online ordering facility, or through mobile applications like Bonds.PH, Overseas Filipino Bank, and LandBank.
Meanwhile, the Treasury also launched a mobile application that allows investors to learn and understand the fund-raising and debt management activities of the national government as well as its latest offerings of securities.
The national government programmed to borrow a total of P3.1 trillion this year, most of which is expected to be raised through domestic sources.
As of end-July this year, the national government’s outstanding debt has already grown to a new record high of P11.61 trillion, swelling by 26.7 percent from P9.16 trillion a year ago.