By CHINO S. LEYCO
August 10, 2010
The government has successfully raised an initial P25 billion Tuesday from the sale of retail Treasury bonds (RTBs) that attracted plenty of interest from small investors looking for steady returns.
The Bureau of Treasury sold P10 billion of 5.875 percent five-year, another P10 billion of 6.625 percent seven-year and P5 billion of 7.25 percent 10-year RTBs at the price-setting auctions for the securities Tuesday.
Total tenders for the five-, seven- and 10-year retail bonds amounted to P26.42 billion, P21.873 billion and P14.86 billion, respectively.
Roberto Juanchito T. Dispo, First Metro Investment Corporation executive vice president, said the government can â€œeasilyâ€ triple the volume it sold at Tuesday’s price-setting auction.
Meanwhile, National Treasurer Roberto B. Tan had said the final sale amount from a retail treasury bond issue starting this week will be much less than P100 billion.
Tan also said the government will adjust next quarterâ€™s borrowing program after the retail bonds.
The government has tapped six private and two state-owned banks as its arrangers for the issuance of peso-denominated longer-term IOUs.
The consortium of banks includes BDO Capital and Investment Corporation, BPI Capital Corporation, First Metro Investment Corporation, Metropolitan Bank and Trust Company, Philippine National BankÂ and Rizal Commercial Banking Corporation.
The government also hired two state-owned banks namely the Development Bank of the Philippines and Land Bank of the Philippines.
The treasury bureau earlier said it will sell RTBs to finance the P75.23 billion worth of RTBs that will mature in August and September this year.
Tan said that P36.47 billion RTBs sold three-years ago will mature on August 1, and another P38.76 billion debt papers that were sold in 2005 will mature on September 8.
The issuance of RTBs is part of the governmentâ€™s savings mobilization program designed to make government securities available to retail investors and at the same time create savings consciousness among Filipinos. With RTBs, investors can buy the debt paper for a minimum amount of P5,000.
The government borrows from the local market through the issuance of Treasury bills and bonds to finance its budgetary requirements and to plug its widening budget gap.
The government also borrows from the foreign market through the issuance of global bonds and by tapping loans from multilateral lenders.
The government needs to plug an expected budget gap of P325 billion this year, revised upward from a previous program of P293 billion.