THE GOVERNMENT sold P507.16 billion in retail Treasury bonds (RTB), surpassing the objective as investors sought improved yields.
National Treasurer Sharon P. Almanza informed journalists on Monday that the demand for RTBs was propelled by “very strong fundamentals” and predictions that rates will persist in declining.
“I believe [the market] anticipates that rates will decrease. The rates surged. They dropped following the [rate-setting] auction,” she remarked.
The total collected for the five-year RTBs was nearly 17 times the P30-billion aim but fell short of the record-high P584.86 billion secured from the RTB issuance in February 2024.
In a statement, the Bureau of the Treasury (BTr) noted that the government garnered P425.5 billion in fresh funds, while the leftover P81.65 billion was sourced through a bond exchange.
Ms. Almanza mentioned that there was increased foreign engagement for this RTB issuance, in contrast to last year when foreign participation constituted about 5% of the total.
“Foreign participation was significant for this RTB, which we hadn’t observed in the past… Clearly much higher than 5%, in double-digit figures,” she stated.
The RTBs were available in minimum denominations of P5,000 through bank branches and other digital platforms.
However, this marked the inaugural instance where RTBs were offered via the electronic wallet GCash through the GBonds feature.
“Funds from the RTB-31 issuance will be allocated to meet the government’s budget requirements for various projects and programs in education, health, infrastructure, agriculture, among others,” the BTr stated.
The government initially raised P210 billion from its five-year RTB offer during the rate-setting auction conducted on Aug. 5, with bids reaching P354.175 billion.
The notes were issued at a rate of 6% per annum, payable quarterly. This is higher than the 5.8469% quoted for the five-year period based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury as of Aug. 18.
The public offering period lasted from Aug. 5 to 15, while settlement is scheduled for Aug. 20.
The BTr also implemented a swap program for individual holders of government bonds maturing on Sept. 9, 2025, Feb. 4, 2026, and Feb. 14, 2026, concluding the exchange program on Aug. 8 due to heightened demand.
The BTr further restricted bids to online platforms starting Aug. 14.
A trader noted in a text message that the funds raised from RTBs “underscores the reality that BTr truly intended to borrow that much,” adding that it remained close to last year’s record-high P585 billion.
“Conversely, this is a favorable issuance considering that a significant portion was indeed for individual investors,” the trader remarked.
The trader indicated that Treasury bill and bond auctions for the remainder of the year are likely to remain unaffected due to P200 billion in maturities next month.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort stated in a Viber message that demand for government securities could diminish in the short term following the liquidity absorbed by the RTBs.
“While the latest RTB issuance effectively extracted some of the excess peso liquidity from the financial framework and may have slightly drained prospective demand for Treasury bills and Treasury bonds in the near term since some investors have already committed beforehand,” he explained.
The government relies on local and foreign sources to finance its budget deficit, which is limited to P1.56 trillion or 5.5% of gross domestic product this year.
The government anticipates total gross borrowings to hit P2.6 trillion this year, before rising to P2.68 trillion in 2026. — A.M.C.Sy
