Gov’t raises P283.7B from retail T-bonds

THE GOVERNMENT raised P283.711 billion from its offering of five-and-a-half-year retail Treasury bonds (RTBs) that ended two days earlier than initially scheduled after exceeding the Bureau of the Treasury’s target.
“The total volume was P283.711 billion… thanks to the overwhelming support. (We) exceeded the target,” National Treasurer Rosalia V. de Leon told reporters via Viber on Wednesday.
“We capped at P250 billion but given strong demand we accepted more. It is a decision to reduce volume compared to last year.”
Of the total amount, the government raised P31.671 billion from the bond exchange offer program.
Under the bond exchange offer, holders of fixed-rate Treasury notes maturing in 2023 can swap their holdings for the new RTBs.
The RTBs were launched on Feb. 7 and raised an initial P162.180 billion from the rate-setting auction. The offer period was initially scheduled to end on Feb. 17.
The five-and-a-half-year RTBs fetched a coupon rate of 6.125%, 37.5 basis points (bps) higher than the 5.75% set for the previous RTB offering in August last year.
A trader said in a Viber message that the amount raised by the government was below the market’s estimate of P300 billion, likely due to the 14-year high inflation print in January.
“It is way below the past RTB issuance and probably because of the higher CPI data which in turn is leading markets to call a 50-basis-point (bp) hike from the Monetary Board,” a trader said. 
“If that is the case, the policy rate is going to be 6% versus the 6.125% coupon of the RTB. So investors may have decided to wait for better levels,” the trader added.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the demand for RTBs may have been reduced by the $3-billion global bond issuance in January 2023, and the government’s plan to offer US dollar or euro retail bond offers later this year.
“The expected narrower budget deficit for 2023 compared to 2022 could have also led to the lower amount of government borrowings though the latest RTB issuance… The lower RTB amount raised could also signal the further diversification of the National Government’s borrowing mix to include other options such as global bonds, official development assistance, other government securities,” Mr. Ricafort said.
Headline inflation rose to a 14-year high 8.7% in January, faster than the 8.1% print in December.
The RTBs target small investors who want low-risk, higher-yielding savings instruments backed by the National Government.
Settlement for the RTBs is on Feb. 22. The RTBs’ maturity date is on Aug. 22, 2028. — Aaron Michael C. Sy