THE GOVERNMENT sold P507.16 billion worth of retail Treasury bonds (RTB), exceeding the target as investors sought better yields.
National Treasurer Sharon P. Almanza told reporters on Monday that the RTB demand was driven by “very good fundamentals” and expectations that rates will continue to drop.
“I think [the market] expects that rates will go down. The rates rallied. They fell after the [rate-setting] auction,” she said.
The amount raised for the five-year RTBs was almost 17 times the P30-billion target but below the record-high P584.86 billion raised from the RTB offering in February 2024.
In a statement, the Bureau of the Treasury (BTr) said the government raised P425.5 billion in new money, while the remaining P81.65 billion came from a bond exchange.
Ms. Almanza said there was more foreign participation for this RTB offering, compared with last year when foreign participation was around 5% of the total.
“Foreign participation was substantial for this RTB, which we didn’t see in the past… Very much more than 5%, double-digit percentage,” she said.
The RTBs were offered in minimum denominations of P5,000 through bank branches and other digital channels.
However, this was the first time that RTBs were sold via electronic wallet GCash via the GBonds function.
“Proceeds from the RTB-31 issuance will be used to support the government’s budgetary requirements for various projects and programs in education, health, infrastructure, agriculture, among others,” the BTr said.
The government raised an initial P210 billion from its offer of five-year RTBs at the rate-setting auction held on Aug. 5, with tenders reaching P354.175 billion.
The notes were priced at 6% per annum, payable quarterly. This is higher than the 5.8469% quoted for the five-year tenor based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury as of Aug. 18.
The public offer period ran from Aug. 5 to 15, while settlement is on Aug. 20.
The BTr also had a swap program for individual holders of government bonds maturing on Sept. 9, 2025, Feb. 4, 2026, and Feb. 14, 2026. It ended the exchange program on Aug. 8 due to strong demand.
The BTr also limited bids to online channels starting Aug. 14.
A trader said in a text message that the amount raised from RTBs “highlights the fact that BTr indeed really wanted to borrow that much,” adding that it was still close to last year’s record-high P585 billion.
“On the other hand, this is a good issuance given that a good portion were really for individual investors,” the trader added.
The trader said Treasury bill and bond auctions for the rest of the year will likely be unaffected due to P200 billion in maturities next month.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that demand for government securities could weaken in the near term after the RTBs absorbed liquidity.
“Though the latest RTB offering effectively siphoned off some of the excess peso liquidity from the financial system and could have somewhat sapped future demand for Treasury bills and Treasury bonds in the near term since some investors already invested beforehand,” he said.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.56 trillion or 5.5% of gross domestic product this year.
The government expects total gross borrowings to reach P2.6 trillion this year, before going up to P2.68 trillion in 2026. — A.M.C.Sy
