THE Bureau of the Treasury (BTr) raised an initial P221.218 billion in three-year retail treasury bonds (RTBs) as investors showed strong appetite for safe-haven assets.
This was an upsize from the initial P30-billion offer as the rate-setting auction for the government’s 25th RTB offering on Tuesday was oversubscribed by more than nine times, with total bids hitting P284.183 billion.
National Treasurer Rosalia V. De Leon attributed the strong investor demand for the debt papers to “oozing liquidity” as well as “flight to safe haven.”
The coupon rate for the IOU was set at 2.375 percent, lower by 200 basis points from 4.375 percent coupon rate of the previous 3-year RTBs sold in February 2020.
Despite this, De Leon is confident that this “good rate” will encourage holders to swap.
In addition to the new RTBs, the BTr is also allowing holders of previously issued bonds to exchange and reinvest their bond holdings for the RTB-25.
Moreover, De Leon said she expects “more retail [volume] during the offer period,” which started on Tuesday, February 9, and will end on March 4, with settlement scheduled on March 9.
Stronger reception–Land Bank
For her part, LandBank President and Chief Executive Officer Cecilia C. Borromeo expressed optimism that there would be an “even stronger” investor reception for RTB-25 given that the last two RTB issuances had set record subscriptions to date. Last year, the Treasury raised P310.8 billion from the sale of three-year RTBs in February and P516.3 billion in five-year RTBs issued in August.
“Aside from earning interest every quarter, investing in RTBs contributes to advancing the government’s Covid-19 response and economic recovery plan,” Borromeo said in a separate statement.
In July last year, the state-run bank raised a total of P35.53 billion in sales for RTB-24.
Bulk of the transactions was completed over the counter. Sales amounted to P25.27 billion and P10.25 billion during the public offer period and rate-setting auction, respectively.
The balance, P8.9-million worth of sales, was generated online through the bank’s Link.BizPortal via the BTr’s online ordering facility.
Apart from over-the-counter placements and online transactions, investors could also purchase the retail bonds via the Overseas Filipino Bank, which is LandBank’s digital-only branchless bank subsidiary.
Through the digital bank’s mobile app, investors can make multiple placements for RTB-25 of up to P500,000 per transaction.
Covid response
RTBs are made available to small investors in minimum denominations of P5,000. RTB-25 will mature in the year 2024.
Proceeds from the issuance of RTBs are expected to boost the government’s funds for its Covid-19 response and recovery efforts.
The national government has been issuing RTBs since 2001 as part of its efforts to support financial inclusion and literacy among Filipinos.
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.
The joint lead issue managers for the 25th RTB offering are Development Bank of the Philippines and LandBank of the Philippines, while the joint issue managers are BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp., PNB Capital and Investment Corp., RCBC Capital Corp., SB Capital Investment Corp., and UnionBank of the Philippines.
With a report by Tyrone Jasper C. Piad
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