Inquirer: P25B raised from retail treasury bonds

Retail treasury bonds or RTB’s are included in another class of investment securities you can put your money in. The article below fairly gives an detailed explanation of what retail treasury bonds are. If you want to invest in these treasury bonds, contact the Trust department of the banks acting as issue managers as mentioned below. I will soon write an article about bonds and other debt securities.

P25B raised from retail treasury bonds
By Ronnel Domingo
Philippine Daily Inquirer
First Posted 18:09:00 08/10/2010

MANILA, Philippines—The Bureau of Treasury raised on Tuesday P25 billion from retail treasury bonds in a price setting auction for five-year, seven-year and 10-year issues.

The five-year bond fetched 5.875 percent, the seven-year 6.625 percent, and the 10-year 7.25 percent.

Issue managers said they would recommend offering another P50 billion worth of the RTBs to the public, to be available under August 17.

Gov’t sets yields of retail T-bonds
By Ronnel Domingo
Philippine Daily Inquirer
First Posted 21:17:00 08/10/2010

THE BUREAU of the Treasury on Tuesday raised P25 billion in retail treasury bonds (RTBs) through a price-setting auction for the debt paper maturing in five, seven and 10 years.

Offerings for the government debt paper aimed at small investors were P10 billion each for the five- and seven-year issues and P5 billion for the 10-year securities.

Coupon rates for the five-year paper were pegged at 5.875 percent while those for the seven- and 10-year bonds settled at 6.625 percent and 7.25 percent.

Investors tendered a total of P62.96 billion for all three tenors, or more than twice the total offer.

Buyers made available P26.42 billion for the five-year, P21.67 billion for the seven-year and P14.864 billion for the 10-year RTBs.

Now that prices have been set, the RTBs will be offered to the public—including individual or small-time investors—until Aug. 17.

RTBs, one of several ways in which the government raises much-needed funds, are called retail because at a minimum investment of P5,000, even individuals can buy the securities.

Interest is paid every quarter, but the amount is subject to a 20-percent withholding tax.

Treasury bonds are considered safe investments because these are fully backed by the government, which usually does not renege on its financial obligations.

Also, the RTBs are a liquid investment because these can be traded in the secondary market before maturity

National Treasurer Roberto B. Tan said in an interview that yesterday’s results were encouraging considering that these were the first RTB issuances under the Aquino administration.

Tan said this was one indication of the financial market’s confidence in President Aquino leadership.

“We are going on a multi-city roadshow to promote this 12th tranche of RTBs in the next few days,” he said.

The roadshow for the public offering—which kicked off in Makati City yesterday—will also cover the cities of Cebu on Wednesday, Davao on Thursday, Cagayan de Oro on Friday, and Laoag on Saturday.

Roberto Juanchito Dispo, executive vice president of First Metro Investment Corp. (FMIC), said in an interview that as part of a group of issue managers, FMIC recommended a public offering of at least P50 billion for all three tenors.

“That amount [plus the amount already raised] will at least service the RTBs that matured,” Dispo said.

He was referring to a total of P75 billion worth of three- and five-year RTBs, some of which matured earlier this month and the remaining maturing in early September.

According to Dispo, yesterday’s results were all lower than prevailing best bids in the secondary market.

In the secondary market, buyers tendered 6.1 percent or 22.5 basis point higher for five-year bonds. Investors also tendered 6.9615 percent for seven-year bonds (higher by 33.65 basis points) and 7.3885 percent for 10-year bonds (higher by 13.85 basis points).

Other issue managers are BDO Capital, BPI Capital, Development Bank of the Philippines, Land Bank of the Philippines, Metropolitan Bank and Trust Co., Philippine National Bank and Rizal Commercial Banking Corp.

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About Benedict Bernabe

Benedict Bernabe, 27. Benedict has a Master's degree in Development Studies from the University of Melbourne, Australia and a Bachelor of Arts degree in European Languages, cum laude, from the University of the Philippines Diliman. He has worked with the United Nations in the Philippines as the Community Facilitator of the Community of Practice on HIV&AIDS. He worked with Standard & Poor's Capital IQ, a financial information company, as researcher, translator and quality analyst in the investment research team. Prior to this, we worked at IBM Business Services. Benedict is a certified yoga teacher.

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