RTB volume hiked 4-fold

The government upsized its borrowing volume from small-scale investors by more than four times for its 27th issuance of Retail Treasury Bonds (RTBs).

The Bureau of the Treasury yesterday hiked the five-year RTB offer to P120.764 billion, exceeding by four times the P30-billion original offer for the securities.

The Treasury said demand for the RTBs reached P183.44 billion, oversubscribing the volume by over six times.

The yield for the five-year debt papers spiked by 31.4 basis points to 4.787 percent, as against the BVAL Reference Rate of 4.473 percent due to risks posed by the looming rate hikes in the US. The RTBs fetched a coupon rate of 4.875 percent.

National Treasurer Rosalia de Leon said the auction gathered the demand expected from RTB issuances. However, she explained that the Treasury had to price in the impact of the impending rate hikes by the US Federal reserve in the yield it gave out to investors.

Likewise, investors asked for increased rates on their purchases to cover for the threats coming from rising inflation in the US, a development that may pressure the Fed to deliver a 50-bps rate hike in its March meeting.

In January, US inflation ballooned to 7.5 percent, the highest in 40 years, compelling the Fed to make its move in taming further price hikes.

By raising the benchmark rate, the Fed hopes to swell borrowing costs, as well in a bid to reduce the demand for big-ticket items like properties and vehicles driving the inflation.

“The auction showed strong interest in RTBs. (The) coupon penciled in rate liftoff and emerging higher inflation risk (in the US),” De Leon said in a text message to reporters.

The Treasury will sell the RTBs via a public offer to small-scale investors until Feb. 28, with March 4 scheduled as the issuance date. Interested buyers may purchase the securities for as low as P5,000, making it affordable compared to the usual bonds that the Treasury puts up for sale.

To entice investors to consider the RTBs, the Treasury canceled the auction for sevenyear and 10-year Treasury bonds slated for Feb. 15 and 22, respectively.