PHL eyes PHP 200-B RTB offer in Q3

The government is planning to raise PHP 200 billion from its first retail Treasury bond (RTB) offering this year, which it could launch within this quarter, Finance Secretary Ralph G. Recto said.

“I think, we’ll issue now the retail Treasury bonds. I think this quarter, within the quarter,” Mr. Recto told reporters last week.

He did not give more details.

The government’s last RTB offering was in February 2024. It raised a record PHP 584.86 billion from its offering of five-year RTBs.

RTBs are medium- to long-term debt securities issued by the government available to retail investors, especially ordinary Filipinos. It is usually sold in minimum denominations of PHP 5,000.

Mr. Recto noted that the upcoming RTB offering will not likely be the last this year.

Analysts expect high demand for the new RTB offering, citing favorable yields and accessibility, while suggesting a tenor of five years may be optimal.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said the RTB offering is expected to attract strong investor interest.

“RTBs remain attractive due to their accessibility to retail investors, relatively high yields compared to savings products, and their reputation as low-risk instruments,” Mr. Asuncion said in a Viber message.

Last May, National Treasurer Sharon P. Almanza said the Bureau of the Treasury (BTr) plans to launch GBonds, which allow retail investors to buy and sell government securities on e-wallet giant GCash by the second half of the year.

This will allow the platform’s 94 million registered users to invest a minimum of PHP 5,000 for RTB and PHP 500 for Treasury bills through the app.

“A tenor of 5 to 7 years would be appropriate, offering a balance between competitive returns and manageable duration risk, while aligning with the government’s medium-term funding strategy,” Mr. Asuncion said.

Meanwhile, a trader said good demand is expected for this issuance, “since the target is lower than the expected maturity.”

“If the yield is attractive enough, I think the BTr can issue up to PHP 400 billion,” the trader said in a Viber message.

It also added that a tenor of 5 to 5.5 years would be suitable for the offering.

The government is looking to hike its borrowing program to PHP 2.6 trillion this year from P2.55 trillion previously, to fund the ballooning budget deficit.

It is still targeting to source 80% of its borrowings domestically and 20% externally.

The latest data from the Treasury showed that the National Government’s gross borrowings fell by 6.67% to P1.33 trillion in the five-month period this year.

Domestic gross borrowings fell by 12.74% year on year to PHP 1.02 trillion.

TWO MORE RATE CUTS
Meanwhile, Recto, who also sits on the Monetary Board, said the Bangko Sentral ng Pilipinas (BSP) has room to deliver two more 25-basis-point (bp) rate cuts this year amid subdued inflation.

“I think the BSP is clear that we expect a 50-bp rate cut all the way till the end of the year,” Mr. Recto said, adding these will likely be delivered in two increments.

“Inflation is down right now,” he added.

Headline inflation averaged 1.8% in the six-month period.

The central bank’s remaining policy meetings are scheduled for Aug. 28, Oct. 9, and Dec. 11.

BSP Governor Eli M. Remolona, Jr. earlier signaled two more rate cuts in 2025, citing inflation falling within the 2-4% target and expected lower economic growth.

At its June 19 meeting, the central bank delivered a second straight 25-bp cut this year, bringing its policy rate to 5.25%.

It has now lowered interest rates by a cumulative 125 bps since it started its easing cycle in August 2024.

However, Mr. Recto said the government remains cautious ahead of the Federal Reserve’s policy meeting later this month.

“We just don’t know what happens in the US right now, what’s going to happen there. We’ll be closely monitoring that as well,” he said.

US President Donald J. Trump has been pushing Federal Reserve Chairman Jerome H. Powell to lower borrowing costs, targeting a 1% policy rate.

However, recent US inflation data may complicate the Fed’s easing trajectory. The US consumer price index picked up to 2.7% from a year ago in June, after rising to 2.4% in May.

“Trump wants to change the Fed, right? He wants a rate cut. That’s what happens there. But for us, as we’re looking at our own inflation data, so far that looks good,” he said.

Asked whether the central bank would proceed with easing even if the Fed holds rates steady, Mr. Recto said: “I think we have room to cut.”

“Maybe not two, depends on what happens in the US as well. But as of today, I would assume that we’re okay for a two rate cuts.” — Aubrey Rose A. Inosante