Treasury offers 5-year RTBs at 6.25%

The Bureau of the Treasury on Tuesday sold an initial P113.772 billion in five-year retail treasury bonds (RTBs) at a coupon rate of 6.25 percent ahead of offering the IOUs to small investors.

Tenders reached P121.807 billion during the rate-setting auction, even as National Treasurer Rosalia V. de Leon told reporters that they expected demand from institutional and retail investors to hit up to P200 billion during the offer period starting Tuesday until March 8.

“Based on the feedback, we can reach P200 billion, but I don’t think we will really be availing that much from this offering,” she said.

The RTBs maturing on March 12, 2024, are available in minimum denominations of P5,000.

The auction was over four times oversubscribed the P30-billion minimum offering for the government’s 22nd RTB sale and the fifth under the Duterte administration.

“We see that investors view this as what we call a last call or last trip to be able to get good rates because of the expectations that eventually rates will be trending downwards with inflation expectations also to continue to decline,” De Leon said, citing that the rate of increase in prices of basic commodities was seen returning within the government’s 2-to-4 percent target range this year even as it a 10-year high of 5.2 percent last year.

The five-year RTBs sold in 2017 had a coupon of 4.625 percent, while the last five-year T-bonds auctioned off by the Treasury in November last year fetched an average rate of 7.003 percent.

A new feature of this RTB issuance is the availability of these IOUs online to those with peso accounts with the state-run lenders Development Bank of the Philippines (DBP) and Land Bank of the Philippines (Landbank).

According to De Leon, “the rest of the other banks are not yet ready with their system” for an online sale.

“We’ve done the road shows in Tokyo, Singapore, and Hong Kong, and we’ve seen a lot of strong interest from our OFWs [overseas Filipino workers]. In fact, some of them have even opened accounts with DBP already to be able to access the RTB online,” she said.

For this RTB sale, DBP and Landbank were tapped as joint lead issue managers.

Meanwhile, the joint issue managers were BDO Capital and Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp., RCBC Capital Corp., as well as SB Capital Investment Corp. /atm