Gov’t raises PHP 585 billion from RTB offering

The government raised a record PHP 584.86 billion from its offering of five-year retail Treasury bonds (RTBs), exceeding the Bureau of the Treasury’s (BTr) target.

The final amount raised was above the PHP 400-billion target mentioned by BTr Officer-in-Charge Sharon P. Almanza during the Feb. 13 rate-setting auction.

The government initially raised PHP 212.719 billion through the RTB 30 during the rate-setting auction.

The BTr raised an additional PHP 372.14 billion during the nine-day public offer period. Of this amount, the government raised PHP 243.45 billion from the bond switch program, while PHP 128.69 billion came from “new money.”

Under the bond exchange program, holders of RTB 03-11, maturing on March 9, 2024, and RTB 05-12, maturing on March 12, 2024, could swap their maturing bonds for the new RTBs.

The five-year RTBs fetched a coupon rate of 6.25%, 12.5 basis points (bps) higher than the 6.125% quoted for the five-and-a-half-year RTBs offered in February 2023, but was lower than the government’s expectations.

“Proceeds from the RTB 30 issuance will be directed towards much-needed funding support for the Republic’s various programs under the agriculture, infrastructure, education, and healthcare sectors, among others,” it said.

The RTBs’ maturity date is on Feb. 28, 2029.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted in a Viber message that the amount raised from RTB 30 was still lower than the maturing RTBs in March worth PHP 700 billion.

“The amount, which may include the exchange program would siphon off some of the excess peso liquidity in the financial system and add to the supply of government securities in the market for the meantime,” he said.

“The RTB issuance could also lead to some foreign investments, with US dollar inflows that could have partly supported the peso exchange rate recently.”

The RTB 30 was sold in minimum denominations of P5,000 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 in multiples of PHP 0.01.

“The RTBs have allowed the investing public/individuals/households to invest a minimum of PHP 5,000 with a relatively higher coupon of 6.25%, thereby encouraging savings/investments, while help in financing the various government infrastructure and other priority spending/projects/programs such as education, nutrition, healthcare, among others,” Mr. Ricafort said.

RTBs were 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 (LANDBANK) mobile banking app.

The joint lead issue managers for the RTB 30 were the Development Bank of the Philippines and LANDBANK, while BDO Capital & Investment Corp., BPI Capital Corp, China Bank Capital Corp., First Metro Investment Corp., PNB Capital and Investment Corp., and Union Bank of the Philippines, Inc. were the Joint Issue Managers.

The RTBs target small investors who want low-risk, higher-yielding savings instruments backed by the National Government.

The government’s borrowing program for this year is set at PHP 2.4 trillion, with PHP 1.85 trillion to be raised from the domestic market and PHP 606.85 billion from foreign sources.

These borrowings are meant to help fund the government’s budget deficit, which is capped at 5.1% of gross domestic product this year or PHP 1.39 trillion. — A.M.C.Sy