Third retail bond issue eyed in Q1

The government will borrow from small creditors in the first quarter as the Marcos administration sets its third offering of retail Treasury bonds (RTBs) in a bid to boost state coffers and finance various projects.

In a statement, the Department of Finance said the Bureau of the Treasury plans to issue the 30th tranche of its RTB (RTB-30) within the first quarter.

This came after newly installed Finance Secretary Ralph Recto met with the Treasury to discuss the country’s strategic financing program for this year.

RTBs are designed for retail investors as a low-risk and higheryielding savings instrument.

“RTBs encourage ordinary Filipinos to start investing in safe and stable sources of passive income, while promoting financial inclusion,” the DOF said.

“The Treasury is looking to engage more digital finance platforms, allowing them to reach a wider investor base,” it said.

This will be the third RTB issuance since the Marcos administration assumed office in July 2022.

The maiden issuance in September 2022 raised a total of P420.25 billion with a coupon rate of 5.75 percent.

Its second offering in February 2023 managed to secure a lower amount of P283.711 billion and a higher rate of 6.125 percent.

RTBs are being sold for as low as P5,000 with interest payments paid quarterly during the term of the bond.

Retail issuances have been a pivotal contributor to meeting the country’s overall funding responsibilities as about 40 percent of outstanding government securities are retail instruments.

Proceeds of the issuance are usually allocated to boost the country’s agriculture sector, infrastructure, education and healthcare systems, among others.

RTBs have also been the strongest performing financial instrument in the Treasury’s portfolio of bond offerings in the last two decades.

Since 2001, the government has raised more than P5 trillion from 29 tranches of RTBs to support financial inclusion and literacy among Filipinos by making government securities more accessible to small investors.

This year, the government plans to borrow P2.46 trillion, still adopting a 75:25 borrowing mix in favor of domestic sources.

Such a strategy aims to mitigate foreign exchange risks, take advantage of liquidity in the country’s financial system, and support the development of the local debt and capital markets.