By Melissa Luz T. Lopez, Senior Reporter

THE government is looking to raise at least P30 billion ($570.6 million) worth of retail treasury bonds (RTBs) starting next week, the Bureau of the Treasury said, as it seeks to shore up fresh funding at a time of increased liquidity.

The Treasury announced on Friday that it is eyeing to offer three-year debt papers to individual investors, just before the Bangko Sentral ng Pilipinas’ (BSP) one percentage point cut in the reserve requirement ratio (RRR) takes effect on June 1.

This is the first RTB offering of the government this year, following a similar issuance in November 2017.

The retail bonds will be priced on Wednesday (May 30) to determine the coupon rate, to be followed by a public offering until Friday (June 8). The Treasury, however, may choose to cut short the offer period as needed.

The bonds will be issued on June 13 and will mature by 2021.

“The Republic reserves the right to increase the overall size of the issue,” the bureau said in its notice sent to agent banks as signed by National Treasurer Rosalia V. De Leon.

The government staged two RTB offerings in 2017, from which they raised P181 billion during their March-April float and P255.4 billion in November. Ms. De Leon previously noted strong appetite for the debt papers, saying that this signified greater interest among Filipinos to save and invest.

Individual investors may secure placements in increments of P5,000.

The RTBs target retail investors as they offer low-risk, higher-yielding savings instruments issued by the national government. Interest payments are settled quarterly subject to withholding taxes.

The notes will be listed at the Philippine Dealing and Exchange Corp.

The planned auction of P10 billion worth of 20-year Treasury bonds on Tuesday has been cancelled to make way for the retail bond offering.

The RTB issuance also comes at a time of additional money supply expected in the local markets, following the maturity of around P130 billion worth of previously issued peso debt notes earlier this week.

The offering also accompanies a one percentage point cut in bank reserves, which will unlock around P100 billion in additional money supply effective June 1.

The national government borrows from local and foreign sources to fund increased spending and boost economic activity, particularly to support the “Build, Build, Build” infrastructure program of the Duterte administration.

The government plans to borrow a total of P888.23 billion this year to plug its budget deficit that is capped at three percent of the country’s gross domestic product.

Economic managers raised the share of foreign borrowings to 35% this year in a bid to diversify its financing base, from 26% previously expected for 2018 and 20% in 2017. Bulk of the borrowings will still be sourced locally.

Plans for another dollar bond float as well as yen-denominated papers are also being finalized, Ms. De Leon previously said.

The Treasury raised $2 billion through a global bonds offer in January, with half representing new money and the other $1 billion for liability management. The government also issued $230 million worth of renminbi-denominated papers or panda bonds in March.









