RP increases bond offer as investors swarm sale

The Philippines increased the size of its retail bond sale on Tuesday after investor appetite for government securities reached nearly five times the offering size, causing a glitch to delay the auction for two hours. Instead of raising P15 billion, the national government was able to collect P25 billion during the initial offering of retail treasury bonds (RTBs), the Bureau of the Treasury (BTr) said. Investors swarmed Tuesday’s auction for the three-, five-, and seven-year retail treasury bonds, causing the BTr’s computer system to bog down. Total bids for the RTBs reached P70.38 billion. Interest paid on three-year RTBs maturing on 2012 reached 5.25 percent as the government accepted P10 billion of total bids that reached P20.366 billion. Similarly, the auction committee accepted a total offer of P10 billion for five-year RTBs with a yield of 6.250 percent. The seven-year government securities due 2016 reached seven percent after the committee awarded P5 billion of the total P19.121 billion bids. “The agent banks were very aggressive with their bids. The results speak for themselves," National Treasurer Roberto Tan told reporters on Tuesday. The RTB’s average rates were below the ceiling set by the government. Earlier, the treasury set yields of 5.375 percent for the three-year debt paper, 6.375 percent for the five-year government securities, and 7.375 percent for the seven-year RTB. Based on Tuesday’s offers, demand for the debt papers could have easily hit P100 billion, said Juanchito Dispo, executive vice president of First Metro Investments Corp., the investment banking unit of Metrobank. “The market is awash with liquidity. We have not yet started the offering period, we just set the rate and the volume already amounted to P70 billion," he stressed. Now is the best time for investors to park their funds as inflation is seen to go up in the next few months and the central bank’s Monetary Board has already ended its cycle of rate cuts. Starting September 15 to 22, these debt instruments will be sold to small local investors for a minimum of P5,000. Government-owned and controlled corporations will also be allowed to buy RTBs. Last year, the government was able to raise some P70 billion after it issued RTBs maturing in three and five years. The Philippines relies heavily on foreign and domestic borrowings to bankroll its budget deficit and settle its financial obligations. Owing to the global slowdown, the country will spend more than it will earn, posting a record deficit of P250 billion, or 3.2 percent of its gross domestic product this year. - GMANews.TV