Retail treasury bond sale hits P100B, breaching record

Investors continued to buy government-issued retail treasury bonds (RTBs), allowing the Philippines to raise more than P100 billion from the transaction, officials said. Eighty two billion pesos worth of three-, five-, and seven-year RTBs were raised from small local investors while another P18 billion was sourced from state corporations, deputy treasurer Eduardo Mendiola told reporters. The record amount is expected to rise further as agents are expected to sell seven-year RTBs for a maximum of P3 billion daily until September 22, Mendiola added. The amount has breached the P77.6 billion and P70 billion earned from the sale of RTBs in 2007 and 2008 respectively. The sale for three- and five-year debt papers were closed on Wednesday due to overwhelming demand. Besides small investors, government-controlled corporations are allowed to invest in RTBs. These agencies include the Government Service Insurance System (GSIS), the Social Security System (SSS), the Philippine Health Insurance Corp., the Philippine Deposit Insurance Corp., and the Home Mutual Development Fund (HDMF) also known as the Pag-Ibig Fund. On Tuesday, the Philippines was able to raise P25 billion during the initial offering held on that day. Yields for three-year bonds fetched 5.250 percent, the five-year debt papers averaged 6.250 percent, and the seven-year government securities fetched 7.000 percent. The Philippines intends to raise cash from local and foreign investors to cover a record budget deficit that is expected to be incurred this year. The deficit is expected to reach P250 billion this year, equal to 3.2 percent of the country’s gross domestic product (GDP). For this year, the government aims to borrow P660.3 billion this year, 32 percent more than last year’s borrowing of P501.1 billion. Sixty-eight percent of this figure – amounting to P451.7 billion – are to be sourced from domestic creditors while the remaining 32 percent or P208.6 billion are expected to come from abroad. - GMANews.TV