Treasury gets nod to issue P500B in retail bonds
Malacañang has given the green light for the issuance of up to P500 billion worth of government securities for small investors.
National Treasurer Roberto B. Tan said in an interview that the Treasury was planning a float of retail debt paper in the fourth quarter.
Tan made the announcement as the yield on the benchmark treasury bills rose 25.2 basis points to 0.69 percent amid a market correction toward higher rates.
Tan said that the Bureau of the Treasury would not use up the maximum amount for the retail treasury bonds (RTBs) in single issuance since the borrowing authority for such volume “is good until it is used up.”
“We will raise only what we need and also what market demand can accommodate,” Tan said. “We are planning for a fourth-quarter issue.”
He said the authorization from the Office of the President was given last week and that the Treasury would come up with a shortlist of possible issue managers within the next two weeks.
RTBs allow a minimum investment of P5,000, which means that individual small investors—as opposed to banks, insurance firms and other usual subscribers of government securities—can buy.
At Monday’s regular auction, the yield on the benchmark treasury bills rebounded from a historic low of 0.438 percent set two weeks ago. The new average rate of 0.69 percent was 19 basis points higher than the 0.5 percent rate for deals done in the secondary market.
The Treasury rejected all tenders for the 182-day bills, but the yield on the 364-day paper went up 18.9 basis points to 1.133 percent.
The average for the year-long bills was 3.3 basis points higher than the 1.1 percent in the secondary market.
The Treasury gave partial awards for the 91-day bills and the 364-day bills, raising a combined P3.13 billion instead of the planned P9 billion for all three tenors.
Offers for the three-month and one-year bills were P2 billion and P4 billion, respectively.
“There are corrections [in the market and] we are trying to follow that direction,” Tan said. “We accepted some tenders to help normalize the interest rates, but bids for the 182-day bills were unreasonable.”
Had the Treasury made full awards, the average yield on the benchmark bills would have jumped 117.4 basis points to 1.612 percent.
Likewise, the average yield on the 182-day securities would have risen 180.2 basis points to 2.484 percent. Those for the 364-day bills would have jumped 67.8 basis points to 1.622 percent.
