The Bureau of the Treasury has launched the government’s first onshore issue of dollar bonds catering to small investors who are looking for a low-risk, accessible and higher-yielding investment.

At the price-setting auction on Wednesday, Sept. 15, the Bureau of Treasury raised an initial $866.2 million in retail dollar bonds (RDBs) consisting of five-year and 10-year IOUs. The amount is higher than the original program of $400 million.

The national government awarded $551.8 million worth of the five-year paper against total tenders of $607.8 billion, and made a $314.4 million award of 10-year notes even as investors were willing to lend as much as $330.4 million.

The five-year and 10-year RTBs carried coupons of 1.375 percent and 2.250 percent, respectively. They were offered in minimum investments of $300 and multiples of $100 thereafter.

“The rates reflect various consideration for pricing including performance of ROPs [US dollar-denominated bonds issued by the Republic of the Philippines, liquidity and worries on US rates liftoff,” National Treasurer Rosalia de Leon told reporters.

The RDB’s public offering will run until October 1, 2021.

The Treasury bureau tapped state-owned lenders, Development Bank of the Philippines and Land Bank of the Philippines, as lead managers.

Meanwhile, the joint issue manager are BDO Capital and Investment, BPI Capital, China Bank Capital, First Metro Investment, RCBC Capital, SB Capital Investment, Standard Chartered and Union Bank of the Philippines.

Earlier, de Leon said that RDB is far more accessible for retail investors than the traditional US dollar bonds issued by the government that require a minimum investment of $200,000.

Del Leon also said RDB has “relatively higher returns,” similar to the traditional peso-denominated retail bond (RTB) and “Premyo” bond.

“The RDBs will particularly appeal to US dollar earners as the structure mitigates foreign exchange risk on the part of investors by maintaining the original currency of their investment,” de Leon said.

“The NG will also assume the withholding tax on interest income, allowing investors to earn full interest on their principal,” she added.

The Duterte administration’s maiden RDB sale followed the $3 billion global bonds sold in June, $2.5 billion euro-denominated bonds in April, and $500 million yen-denominated “Samurai” bonds in March.

This year, the government plans to borrow P3 trillion to bridge its projected budget deficit.