Sale of RTBs in Q4 eyed

The government is considering selling another P35 billion to P40 billion worth of Retail Treasury Bonds (RTBs) in the fourth quarter to meet expected additional demand from individual investors.

Deputy Treasurer Eduardo Mendiola on Monday said this, noting that the move was also aimed at encouraging more Filipinos to invest.

Unlike regular treasury bonds, RTBs require a minimum investment of only P5,000, making them affordable to a greater number of individual investors.

“We are considering P35 billion to P40 billion,” Mendiola told reporters Monday after the auction for Treasury bills.

The amount will be on top of the P103 billion worth of RTBs that the government sold in February this year, which had tenors of 5 and 10 years.

The 5-year bonds fetched a rate of 6 percent, while that on the 10-year debt paper was higher 7.375 percent.

Mendiola said the RTB issuance, if this would be pursued, would likely be held in October or November.

The sale of RTBs in the domestic market is consistent with the government’s aim of gradually shifting its borrowing requirements from foreign currency-denominated obligations to peso-denominated instruments.

Finance officials said raising more funds via sale of peso-denominated instruments would help reduce the country’s exposure to foreign exchange risk.

Funds raised by the government from bond sale, such as RTBs, are meant to help plug the government’s budget deficit and pay maturing obligations.

For this year, the government set a budget deficit ceiling of P300 billion, lower than the actual gap of P314 billion last year.

Finance officials said the actual deficit for this year could be much lower than the P300-billion ceiling, noting the relatively small budget gap posted as of the first half.

Data from the Department of Finance showed that the deficit in January to June amounted to only P17.23 billion, significantly lower than P152.13 billion programmed for the period.

The government aims to reduce the deficit over the medium term in the hope of improving the country’s credit-worthiness.—Michelle V. Remo