Gov’t sells P66-B retail T-bonds to fund budget

The government on Wednesday borrowed P66 billion from small lenders—through this year’s first retail treasury bond auction—to augment its budget for the Duterte administration’s infrastructure buildup program.

In a statement, the Bureau of the Treasury said it would pay a coupon rate of 4.875 percent to the holders of the retail bonds, which have a tenor of three years.

The bonds will be offered to the general investing public for minimum denominations of P5,000 between May 30, 2018, and June 8, 2018, the agency said, adding that strong demand for the bonds prompted its auction committee to increase the offer size to P66 billion from the initial P30 billion, with total tenders amounting to P92.8 billion.

This marks the 21st time the government is issuing retail bonds since the product was conceptualized to help small investors get better yields on their funds. Last year, the Treasury offered retail bonds twice, raising more than P430 billion for the government.

Proceeds from the issuance of retail bonds will form part of the Philippine government’s fundraising efforts for its massive infrastructure program.

“The strategic timing of our issuances, as part of our proactive debt management strategy, allowed us to do such transaction amid a favorable macroeconomic environment,” National Treasurer Rosalia de Leon said.

The bond sale also takes into account the large amount of liquidity in the financial system and that mopping this up will help control inflation.

“We have always echoed the thought that the current inflation pressures are transitory and that inflation figure will eventually return within the government’s target range. Recent economic events opened an opportunity for us to issue retail bonds when the market is liquid and rates are relatively lower,” De Leon said.