Gov’t to issue RTBs before yearend

The Bureau of the Treasury is keen on issuing retail treasury bonds (RTB) before the end of the year to meet market demand. National Treasurer Omar T. Cruz Thursday told reporters the clamor for RTBs had been mainly driven by strong market liquidity. "We are always open to look at market preferences and demands, but we have to balance it with our requirements. The market is talking to me about it," he said on the sidelines of an investment conference in Makati. Mr. Cruz said the bureau would have to tweak its borrowings once RTBs are floated in the market. He also said the government would be borrowing close to P40 billion to P50 billion for the rest of the year. "Certainly, our fiscal position is stronger than ever but we can’t just absorb all of these," he pointed out. "It’s contrary to sound viability and debt management for us to carry borrowings. What we do is, if the market is strong, we tweak our borrowings for the rest of the year," he added. The national treasurer said he would make a formal announcement to the market once plans are firmed up. The bond market expects P35 billion of retail bond maturities in the first week of December. Retail T-bonds, which primarily cater to the retail market or end-users, have turned in large amounts for the government in the past few years. A minimum of P30 billion to P40 billion worth of the bonds are usually offered yearly. A local bond trader said the government might have to cancel remaining auctions for December to make way for the RTB issuance and to get better prices. "If they push through with the five- and seven-year Treasury bond auction, in a way, RTB rates might suffer. RTB issuances are historically successful. I think it makes sense for them to issue RTBs because it opens up the Treasury to get more money for next year to generate more funds," he said. The trader added that limiting the number of auctions until November would make a statement about the government’s healthy cash position. "Even if they push through with the auctions in December, I still see a good turnout, but it would be more favorable if they cancel it. With excess cash and low interest rates for time deposits, I’m seeing a very good issuance for them," the trader said. Some P40 billion was raised the last time the government had sold RTBs late last year. — Bernardette S. Sto. Domingo/BusinessWorld