Treasury awards fresh P100-B bonds as investors rush to buy

Investors swamped the first retail treasury bond (RTB) issuance of the government under investment grade, allowing the government to award more debt papers than planned with low interest rates.  
 
The auction committee on Tuesday awarded P100 billion worth of fresh 10-year RTBs, more than three times the P30-billion offer.

The newly issued bonds carry a coupon or interest rate of 3.25 percent, lower than the 3.41 percent on re-issued treasury bonds in February.

On the first day of Bureau of Treasury’s (BTr) offer period, the auction committee got P271.59 billion in bids from participating banks, allowing the government to set a low rate.

Banks’ tenders for the issuance were proof of “oozing liquidity onshore” and appetite for the government's “first debt issuance under an investment grade banner,” National Treasurer Rosalia de Leon said during an investors' forum for the RTB sale Tuesday afternoon.

This year the country received investment grade ratings from Fitch Ratings and Standard & Poor’s, while the Japan Credit Rating Agency hiked the Philippine sovereign rating to two notches above investment grade.

Moody's Investors Service is now reviewing the country's sovereign ratings for a possible upgrade to investment grade.

High demand may prompt the government to cut the two-week offer period short, De Leon noted in an interview after the briefing. But she said they will still not exceed the P188-billion record RTB issuance last October.

Despite the demand, De Leon maintained that “there is no crowding out of private sector financing as evidenced by successful corporate issuance” before the BTr’s sale of fresh RTBs.

BDO Capital & Investment Corp., BPI Capital Corp., Development Bank of the Philippines, Land Bank of the Philippines, SB Capital Investment Corp and First Metro Investment Corp (FMIC) were tapped to serve as underwriters for the issuance.

Participating banks were required to allot 20 percent of the fresh 10-year RTBs to individual investors.

De Leon noted this was part of allowing ordinary Filipinos to participate in the debt market.
 
“Through this RTB we hope to continue raising investment opportunities for the average Juan,” she said.

As such, the BTr is already mulling the issuance of retail bonds linked to specific infrastructure projects, said the National Treasurer.

“It’s the social impact that drives us to continue with this issuance and inspires us to continue with innovative issuance,” she said.

De Leon added that the BTr is currently discussing with its regulator the possibile issuance of inflation-linked bonds within the year. — BM, GMA News