The government on Tuesday sold P65 billion worth of retail Treasury Bonds after investors flocked the first day of auction set for the debt paper.
The Bureau of Treasury accepted P65 billion for the 10-year RTBs at a coupon rate of 3.5 percent, 71.8 basis points below the previous average of 4.218 percent. The rate is higher than the secondary market rate of 3.4208 percent.
The government plans to use proceeds from the issue, the first under the Duterte administration, to finance the expenditure program that focuses on infrastructure and social services.
Tenders for the debt facility reached P123.735 billion, or more than four times higher than the original offer of P30 billion.
“The proceeds are generally for the financing program for the year. As you know, we are ramping up our infrastructure expenditures as well as the provisions of the social services, for human capital development. This is part of the whole financing for the government,” said National Treasurer Roberto Tan after the auction.
“We had a very good turnout in our auction to price the RTBs. So we’ll start our offer period (and it will run) until next week,” Tan added.
The government will offer the bonds to the general investing public at a minimum denomination of P5,000 starting Sept. 6 until Sept. 16, 2016.
Tan said the RTB issuance was part of the government financing program for the year and would support the goal of the current administration to boost infrastructure development in the country.
Tan said the RTBs also aimed to encourage savers in the country to explore government securities.
“The issuance of RTBs is also designed to encourage investment-consciousness among Filipinos, especially small and individual savers, expand the retail investor base of government securities and further develop the capital market,” Tan added.
The government has set a gross borrowing program of P631.3 billion in 2017, or 9.22 percent lower than P695.4 billion this year.
The government last sold the RTBs three years ago under the Aquino administration, with about P150 billion worth of RTBs during.
“That’s three years ago. Well it just means that the pricing has been quite stable if you are referring to 2013, (with) that very small uptick,” Tan said.
“We are very glad to see the turnout of the auction today, more than four times oversubscribed, and the (rate), I think, is a very reasonable rate which would be attractive for investors and also advantageous for the borrower,” he added.
Tan said the Treasury planned to hold national roadshows for the issuance in different cities, including Davao, Cagayan de Oro, Cebu, Iloilo, Naga, Batangas and Baguio, and in the National Capital Region.
“We will look at the demand as we move forward into the offering period,” Tan said.
The BTr tapped Land Bank and First Metro Investment Corp. as the lead issue managers for the transaction, and BDO Capital & Investment Corp., BPI Capital Corp., Development Bank of the Philippines and Chinabank Capital as issue managers for the retail bond offering.