Investors snap P5,000-worth retail bonds

MANILA, Philippines – The Bureau of Treasury has decided to stop the sale of its recent retail treasury bonds (RTB) after only 3 days as cash-flushed investors snapped state-backed instrument that requires a minimum investment of P5,000.

The 15- and 20-year RTBs were supposed to be offered from Febuary 21 to 29, but the Treasury decided to end the sale on Thursday, February 23.

“We have decided to cut the offer period,” Deputy Treasury Eduardo Mendiola told reporters, adding that the demand for RTBs has already exceeded expectations.

Mendiola said the government is eyeing to cap the total sale at around P150 to P180 billion, possibly setting a new record in the history of its retail bond sale.

As of February 22, the government has already sold P106.73 billion worth of RTBs or P25.78 billion for the 15-year paper and P80.95 billion for the 20-year debt.

For the 15-year paper, interest rate was set at 5.375% at an auction on Monday, lower than the 6.25% offered by the government for a similar dated paper in October 2011.
 
For the 20-year paper, the coupon rate was set at 5.875%, a premium over the 5.35% fetched by the same paper in the secondary market.

The issuance of RTBs is part of the government’s savings mobilization program. The program aims to make government securities available to retail investors and to raise savings rates among Filipinos.

The government sold P110 billion in October 2011 and P104 billion in March 2011. Another batch will be offered in the second half of the year, Treasury officials have said. – Rappler.com