Should you buy the new 5.5-year retail bonds?
With the “flattening” of the peso yield curve, it may be time to consider the new retail treasury bonds offered by the Bureau of the Treasury.
By Patty Membrebe
This article is exclusive to Metrobank preferred clients.
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(UPDATE: Since its first day of trading in the secondary market, the yield of RTB 5-16 has traded higher from its coupon of 5.75% to 6.345% now, based on the indicative offer yield as of Sept. 14, 2022. This is as investors sold off the 5.5-year bond to trim risk positions in this tenor bucket, in anticipation of even bigger rate hikes by the BSP, and in turn, higher yields. With the yield pick-up of over 50 basis points in one week, we think that RTB 5-16 is a good buy at current levels, particularly at 6.30% or better.)
The government recently offered retail treasury bonds called RTB 5-16. With a tenor of 5.5 years and a coupon rate of 5.750%, these bonds may be a good addition to your portfolio.
Here’s why.
RTB 5-16 versus shorter-term bonds
As the Bangko Sentral ng Pilipinas (BSP) has signaled further rate hikes for the year, we continue to expect a “flattening” of the peso yield curve. This means the yields of short-term bonds are becoming much closer to the yields of long-term bonds.
This is not usually the case because when you tie up your money for a longer time in an investment, the yield or return is us