BTr may shorten retail bond offer period

MANILA, Philippines – The Bureau of the Treasury may cut short the ongoing offer period for retail treasury bonds (RTBs), which is supposed to end on August13, to avoid over borrowing given the strong demand for the debt paper.

According to National Treasurer Rosalia De Leon, the BTr does not intend to raise more than the P188 billion from the RTB sale.

“We are still selling, but we may have to cut [the offer period]. We will see next week how much more we can sell, but we definitely do not want to exceed last year’s amount (P188 billion),” De Leon told the Inquirer.

The offer period started during the price-setting auction on July 30.

The RTBs carry a 10-year maturity and an interest rate of 3.25 percent per year.

The BTr was originally planning to sell only P30 billion worth of RTBs, but the amount sold already hit P100 billion on the first day of the offer period.

She said the government did not want to borrow way more than its funding requirements. As such, she said, the amount of RTBs to be sold would be capped to avoid exceeding P188 billion.

The enormous liquidity in the market is credited for the substantial demand for the RTBs. The liquidity is partly attributed to a recent ruling of the Bangko Sentral ng Pilipinas prohibiting retail funds from its special deposit account (SDA) facility. The ruling has started to cause withdrawals of funds from SDAs to the benefit of government securities, De Leon said.

In the meantime, she said that besides funding the government’s expenditure and debt-payment requirements, the sale of RTBs was also intended to promote the habit of investing among average Filipinos.

Unlike other government securities, RTBs are suitable for small and individual investors since the minimum investment requirement is only P5,000.

De Leon said the BTr had given a directive to securities dealers to allocate at least 20 percent of the RTBs they were selling to retail investors. She said the agency was strictly implementing this order.

“We want retail investors to  benefit from this issuance,” she said.  Michelle V. Remo