“`html<\/p>\n
THE GOVERNMENT is aiming to generate P200 billion from its inaugural retail Treasury bond (RTB) issuance this year, which it could initiate within this quarter, Finance Secretary Ralph G. Recto mentioned. <\/span><\/p>\n \u201cI believe we\u2019ll launch the retail Treasury bonds now. I think this quarter, within the quarter,\u201d Mr. Recto informed reporters last week.<\/p>\n He refrained from providing further specifics.<\/p>\n The government\u2019s previous RTB issuance occurred in February 2024. It garnered a record P584.86 billion from its offering of five-year RTBs.<\/p>\n RTBs are medium- to long-term debt instruments issued by the government, accessible to retail investors, particularly ordinary Filipinos. They are typically sold in minimum denominations of P5,000.<\/span><\/p>\n Mr. Recto remarked that the forthcoming RTB issuance will probably not be the final one this year.<\/p>\n Analysts anticipate a strong demand for the new RTB offer, noting favorable yields and accessibility, while suggesting that a tenor of five years might be most suitable.<\/p>\n Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, indicated that the RTB offering is likely to draw significant investor interest.<\/p>\n \u201cRTBs continue to be appealing due to their accessibility for retail investors, relatively high yields in comparison to savings products, and their status as low-risk instruments,\u201d Mr. Asuncion stated in a Viber message.<\/p>\n Last May, National Treasurer Sharon P. Almanza revealed that the Bureau of the Treasury (BTr) intends to launch GBonds, enabling retail investors to buy and trade government securities on e-wallet giant GCash by the latter half of the year.<\/span><\/p>\n This will permit the platform\u2019s 94 million registered users to invest a minimum of P5,000 for RTB and P500 for Treasury bills through the application.<\/p>\n \u201cA tenor of 5 to 7 years would be appropriate, striking a balance between competitive returns and manageable duration risk, while aligning with the government\u2019s medium-term funding strategy,\u201d Mr. Asuncion remarked.<\/p>\n Meanwhil<\/span>e, a trader noted that strong demand is anticipated for this issuance, \u201cgiven that the target is lower than the expected maturity.\u201d<\/span><\/p>\n \u201cIf the yield is sufficiently attractive, I believe the BTr can issue up to P400 billion,\u201d the trader expressed in a Viber message.<\/p>\n It also added that a tenor of 5 to 5.5 years would be fitting for the issuance.<\/p>\n The government aims to increase its borrowing program to P2.6 trillion this year, up from P2.55 trillion previously, to address the expanding budget deficit.<\/p>\n It continues to target 80% of its borrowings sourced domestically and 20% externally. <\/span><\/p>\n The latest Treasury data indicated that the National Government\u2019s gross borrowings decreased by 6.67% to P1.33 trillion in the five-month duration this year.<\/span><\/p>\n Domestic gross borrowings dropped by 12.74% year on year, totaling P1.02 trillion.<\/p>\n TWO MORE RATE CUTS \u201cI believe the BSP is clear that we anticipate a 50-bp rate cut all the way until the year\u2019s conclusion,\u201d Mr. Recto said, adding that these will likely occur in two increments.<\/span><\/p>\n \u201cInflation is currently low,\u201d he added.<\/p>\n Headline inflation averaged 1.8% during the six-month period.<\/p>\n The remaining policy meetings of the central bank are scheduled for Aug. 28, Oct. 9, and Dec. 11.<\/p>\n BSP Governor Eli M. Remolona, Jr. previously indicated two additional rate cuts in 2025, referencing inflation falling within the 2-4% target and anticipating slower economic growth.<\/span><\/p>\n At its June 19 meeting, the central bank executed a second consecutive 25-bp cut this year, lowering its policy rate to 5.25%.<\/p>\n It has now reduced interest rates by a total of 125 bps since initiating its easing cycle in August 2024.<\/p>\n
\n<\/b>Meanwhile, Recto, who also serves on the Monetary Board, mentioned that the Bangko Sentral ng Pilipinas (BSP) has the capacity to implement two additional 25-basis-point (bp) rate reductions this year amidst low inflation.<\/span><\/p>\n