Government looks to raise PHP 30 billion from RTBs

The government is looking to raise at least PHP 30 billion from the sale of its first retail Treasury bond (RTB) offering this year.

In a notice on its website dated July 30, the Bureau of the Treasury (BTr) said it is planning to sell a minimum PHP 30 billion worth of five-year peso-denominated RTBs due in 2030.

This will be the government’s 31^st RTB offering and the first time that small-denominated government securities will be available on an e-wallet.

The rate-setting auction is scheduled for Aug. 5.

“The interest rate shall be based on current market levels of comparable securities rounded down to the nearest one-eighth (1/8) of one percent (1%),” the BTr said.

The final interest rate will be determined through a Dutch auction with the government securities eligible dealers. In a Dutch auction, the rate for the bond is determined by starting with the highest rate and incrementally lowering it until it is accepted by the auction participants.

The public offer period will run from Aug. 5 to Aug. 15, unless ended earlier by the Treasury.

The RTBs are scheduled to be issued and settled on Aug. 20. It will also mature on Aug. 20, 2030.

The RTB 31 will be sold in minimum denominations of PHP 5,000 and in multiples of PHP 5,000 thereafter, with a maximum investment amount of PHP 500,000, while each exchange offer will have a minimum amount of PHP 5,000.

Due to the RTB offer, the BTr will cancel the scheduled auction for five-year Treasury bonds on Aug. 5.

The Treasury is also offering a bond exchange program for holders of government bonds maturing on Sept. 9, 2025 (FXTN 10-60), Feb. 4, 2026 (FXTN 03-01), and Feb. 14, 2026 (FXTN 07-62). The exchange offer also runs from Aug. 5 to 15.

“The purpose of the invitation is to present a reinvestment opportunity for holders of the Eligible Bonds given its forthcoming maturity dates. The Exchange Offer is likewise intended to manage refinancing risk in the debt portfolio of the Republic and is an integral part of its overall liability management program,” the BTr said.

BTr set the repurchase price for eligible bondholders at 99.79% of the face value to be exchanged for the FXTN 10-60, 99.92% for FXTN 03-01, and at 100.42% for the FXTN 07-62.

The RTBs will be available through over-the-counter placement in bank branches and digital channels such as the BTr Online Ordering Facility, the Bonds.PH mobile app, the Overseas Filipino Bank mobile banking app, and the Land Bank of the Philippines mobile banking app.

The RTBs will also be available to users of the GCash app through GBonds for a minimum of PHP 5,000.

Finance Secretary Ralph G. Recto previously said the government could be aiming to raise PHP 200 billion from the RTBs.

A trader said in a text message that the government could raise as much as PHP 500 billion from the offer if the yield reaches 6.125% due to the exchange option, but this would depend on the July inflation figure.

“If July CPI (consumer price index) data confirms Bangko Sentral ng Pilipinas (BSP) will be able to cut next month, then the RTB might fetch 6%. If not 6.125%,” the trader said.

The Philippine Statistics Authority will release July inflation data on Aug. 5.

The RTBs could fetch a coupon rate of 6% due to about PHP 800 billion in maturing bonds from August to September, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

This would be higher than the 5.9345% seen for the five-year bond according to the PHP Bloomberg Valuation Service (BVAL) Reference Rates as of July 31.

Mr. Ricafort also noted holders of the maturing five-year RTBs issued in 2020 may be looking for reinvestment opportunities “since these were set near record low of 2.625% five years ago and would be reinvested possibly at more than twice the yield at around 6%.”

The Treasury last offered RTBs in February 2024, raising P585 billion from five-year notes at a coupon rate of 6.25%.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.56 trillion or 5.5% of gross domestic product this year. — Aaron Michael C. Sy