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Investors troop to year’s first RTB issue; P134 billion awarded

THE Bureau of the Treasury (BTr) has awarded an initial P134 billion worth of three-year retail treasury bonds (RTBs), which is almost five times oversubscribed from the P30-billion offering.

The coupon rate for the IOU—the 23rd tranche of RTBs offered by the government and the first for 2020—was set at 4.375 percent, with tenders amounting to P149.827 billion.

For minimum denominations of P5,000, the general investing public could take advantage of the issuance, which will be offered until February 6, 2020.

National Treasurer Rosalia V. de Leon said the increasing participation in the RTBs and the recently issued Premyo (prize) Bonds shows that the government is charting the right path in making basic investment products accessible.

“The republic first launched the RTBs in 2001 and, since then, it has not only become a staple fund-raising exercise for the national government’s priority programs, but has also provided an avenue for the investing public to work together with the government to promote the advancement of the economy,” de Leon was quoted in a statement as saying.

RTBs are generally considered low risk for investors as these allow them to earn on a fixed interest based on prevailing market rates, and are paid quarterly during the term of the bond.

Moreover, de Leon also told financial reporters that they considered the volume in pricing the RTBs at a coupon rate of 4.375 percent.

“You also have to see the volume and, obviously, because this is an RTB catering to the retail [investors], then we’ll have to provide some incentive for them to participate,” she said.

The issuance of RTBs by the government was done to urge the country’s unbanked population to open bank accounts, as well as save and invest their money.

According to the BTr, proceeds from the issuance of RTBs will be used for general budgetary purposes, infrastructure projects and social services.

Interested investors of RTBs should have a peso account with selling agent banks accredited by the BTr. It is through this peso bank account that investors will receive their quarterly interest payments and principal amount on maturity.

Interested investors may also participate through using the online ordering facility available through Land Bank of the Philippines (LandBank) and Development Bank of the Philippines (DBP).

Likewise, the BTr is also introducing a switch tender offer where bond holders of RTB 3-08—issued in April 11, 2017, and maturing on April 11, 2020—will be allowed to exchange their holdings for the latest RTB offering.

RTB 3-08 holds a coupon rate of 4.25 percent, which is lower than the coupon rate of the latest tranche of RTBs.

De Leon said this offer provides RTB 3-08 holders with a convenient reinvestment option for their current holdings at no cost.

In the same interview, she said the bureau at present has set an initial cap of P15 billion per working day for the switch tender offer.

Interested holders just need to approach their broker or dealer to facilitate submission of their offers.

For the first time, the National Registry of Scripless Securities, through its Switch Module, will serve as the economic platform whereby offers to exchange will be submitted, allocated and settled.

The DBP and LandBank are the joint lead issue managers for the 23rd RTB offering. They are joined by BDO Capital and Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp., PNB Capital and Investment Corp., RCBC Capital Corp. and SB Capital Investment Corp. as joint issue managers.

The BTr is also set to hold road shows on the issuance of RTBs in key cities throughout the country.

In 2019, the government sold P235.935 billion in five-year RTBs, which had a coupon rate of 6.25 percent.

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