Govt to sell RTBs instead of treasury bonds

The Bureau of Treasury has dropped the sale of 10-year treasury bonds in favor of the auction for retail treasury bonds. In a notice to government securities eligible dealers, National Treaurer Roberto Tan said the government will no longer be pushing through with the sale of the treasury bonds worth P8.5 billion scheduled on Tuesday. Instead, the government will be auctioning P5-billion worth of three-year RTBs, P5-billion worth of five-year RTBs, and P5-bllion worth of seven-year RTBs on September 15. “Furthermore, the said RTB offering shall be in lieu of the 10-year regular T-Bond auction originally scheduled on September 15," Tan stated in the notice. The scheduled auction on Tuesday would set the yield of the three-year RTBs due 2012, five-year RTBs due 2014, and seven-year RTBs due 2016. The debt instruments would be sold to small local investors at a minimum amount of P5,000 starting September 15 to September 22. Joint issue coordinators for the RTBs are Banco de Oro Universal Bank, BPI Capital, Development Bank of the Philippines, First Metro Investment Corp., Land Bank of the Philippines, Metropolitan Bank & Trust Co., and Rizal Commercial Banking Corp. Tan earlier said the government intends to sell at least P25-billion worth of three-, five-, and seven-year RTBs in a bid to raise additional funds to plug the budget gap, which is seen to hit 3.2-percent of the country’s economic output or the gross domestic product. Last year, the government successfully raised P70 billion from the issuance of three- and five-year RTBs to small local investors as well as government-owned and controlled corporations as well as social security institutions. The Philippines has been relying on foreign and domestic borrowings to fund its budget deficit and pay off maturing debts. The government’s borrowings are expected to increase 18.5 percent to P652.98 billion this year from P551.77 billion last year. Borrowings from foreign creditors would jump 176 percent to P196.88 billion from P71.31 billion while borrowings from domestic sources would decline 4.9 percent to P456.09 billion from P479.77 billion. The weak business environment is seen to bring the country’s budget deficit at a record 3.2 percent of GDP from P68.1 billion or 2.5 percent of GDP last year. -GMANews.TV