Gov’t to sell at least P50B in retail treasury bonds in Oct.

The Bureau of the Treasury (BTr) is planning to issue in October at least P50 billion in 10-year and 15-year treasury bonds for small investors.

Deputy National Treasurer Eduardo S. Mendiola said the BTr has received proposals from two groups of arrangers and was targeting to hold the issuance in the second or third week of next month.

“We are currently undergoing the selection process, we expect to give a mandate this week,” Mendiola said.

Mendiola said the total minimum combined offer for both tenors of retail treasury bonds (RTBs) would be between P50 billion and P60 billion.

“The fund that will be raised will form part of the government’s overall financing scheme,” Mendiola said. “It will be used for the rollover and refinancing of maturing (obligations) and expenditures.”

“More than that, (the RTB issuance) is also part of our savings mobilization program, to educate the people and promote financial literacy,” he added.

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 the retail bonds.

Earlier this month, National Treasurer Roberto B. Tan said Malacañang had given the go-ahead for the issuance of up to P500 billion worth of RTBs.

Tan said the BTr would not use up the maximum amount in one go, since the borrowing authority for such volume “is good until it is used up.”

The BTr chief said the government would raise only what it needed and what the market could accommodate.

This will be the government’s second retail bond sale this year. The first was held in March, when the BTr sold 5-year and 10-year retail treasury bonds.

Also on Wednesday, the yield on the 25-year treasury bond slid to a coupon rate of 7.625 percent, 51.5 basis points lower than the previous average of 8.14 percent for the most recent issue of the same tenor in the primary market.

Wednesday’s yield  for the issue was 6.8 basis points lower than the 7.557 percent posted for done deals in the secondary market.

Investors tendered a total of P30.818 billion or more than thrice the volume offered.

The BTr raised P9 billion as planned from Wednesday’s issue.

Finance Undersecretary Gil S. Beltran said auction results showed that the government’s finances are “very stable.”

Beltran said the high demand for long-term securities indicated the country’s readiness for a higher level of growth.