Philippines raises $2.4-B in retail treasury bonds

Posted at 03/02/2011 6:02 PM | Updated as of 03/02/2011 6:49 PM

MANILA, Philippines (UPDATED) - The government raised almost P104 billion ($2.4 billion) from the sale of retail Treasury bonds, the Bureau of Treasury said on Wednesday, giving it room to better manage its borrowing for the rest of the year.

National Treasurer Roberto Tan said the government would review its financing plan after the retail bond sale, which attracted orders of P135 billion, more than 4 times the minimum issue size of P30 billion.

The Bureau of Treasury said in a statement it had sold P33 billion of 5-year retail bonds and P70.96 billion of 10-year bonds between February 22 and March 2.

More than half of the total went to small investors and the rest to financial institutions and state-owned and -controlled corporations.

Retail bonds are sold in P5,000 denominations, making them accessible to small investors. 

Issue date of the bonds is on March 3.

The 5-year bond pays a coupon of 6% and the 10-year paper 7.375%, with quarterly interest payments.

Deficit

The Philippines, relies heavily on local and foreign borrowings to fund its budget deficit, which is expected to reach P290 billion, or 3.2% of GDP this year from an estimated P310 billion, or 3.6% of GDP, last year.

For 2011, Manila is targeting gross borrowing of P772.9 billion, of which 73%, or P563.3 billion, will be raised from the local bond market.

The Philippines last sold retail T-bonds in August 2010, when it raised P97 billion in an issue that attracted orders almost 5 times the offer size.

Issue managers of the retail T-bonds were First Metro Investment Corp, state lenders Development Bank of the Philippines and Land Bank of the Philippines, BPI Capital of the Bank of the Philippine Islands, and Metropolitan Bank & Trust Co. 

Borrowings

The funds give the government room not to borrow at weekly Treasury auctions where it says banks have been demanding excessive yields. Banks have been seeking higher yields on concern that inflation will boost interest rates. 

The government has been tapping funds from individuals since 2001 and has raised more than P200 billion from RTB sales in the past 2 years.

About P28.8 billion of 3- and 5-year retail bonds will mature in July and in December this year. Last year, the government sold P97.5 billion of the bonds in August 2010 and P114.4 billion in September 2009.