The Marcos administration plans to raise as much as P150 billion from small investors through its latest sale of retail treasury bonds (RTBs), using the proceeds to refinance maturing debt and help cover the government’s budget deficit.
The target represents new money the government hopes to raise through the offering, National Treasurer Sharon Almanza told reporters on Tuesday.
At yesterday’s rate-setting auction, the government accepted P84.9 billion of the P188.6 billion in total bids for the new bonds.
The securities, which mature in 2.5 years, carry a coupon rate of 6.875 percent.
The offer period runs from Sept. 29 to Oct. 7.
Individual investors can buy the bonds for as little as P5,000, while holders of eligible securities can exchange their existing bonds for the new issue.
Almanza said bond switches typically have a participation rate of 10 percent to 20 percent, and the Treasury could accept exchanges at the upper end of that range.
Short maturity
Meanwhile, the shorter maturiy reflects stronger demand for shorter-term investments as uncertainty makes investors more reluctant to lock up their money for longer periods, Almanza said.
Previous retail bond offerings had five-year maturities.
So far, the average residual maturity of the government’s debt stock stood at about seven years, Almanza said, adding that the government continues to do active liability management exercise like debt switches, which could be done again before the end of the year. ‘Given where the rates are and how defensive the market is, we want to also make sure that we are not adding costs for the government,’ Almanza said. ‘We’re still hoping that by next year, rates will moderate.’
RTBs have become one of the government’s main sources of local borrowings to plug its budget deficit, projected at P1.658 trillion or 5.4 percent of gross domestic product.
At the same time, proceeds could help repay about P142 billion in old RTBs maturing this month and in October.
The RTBs form part of the government’s plan to borrow P892 billion from domestic sources for the fourth quarter.