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Manila Bulletin devider Business devider Gov't retail bond sale rakes in $611-M

Gov't retail bond sale rakes in $611-M

Published Sep 27, 2023 07:19 am

At A Glance

  • The government raised $611.2 million from the sale of retail dollar bonds (RDBs) to local investors, including overseas Filipino workers (OFWs).<br>The offering was oversubscribed by more than three times. The RDBs had a coupon rate of 5.750 percent. The sale attracted significant interest from investors, resulting in a total tender of $636.2 million.<br>The offering was available through select banks from Sept. 27 to Oct. 6, 2023.<br>Selling banks included Bank of the Philippine Islands, China Banking Corp., Development Bank of the Philippines, The Hongkong and Shanghai Banking Corp., Metropolitan Bank & Trust Co., Philippine National Bank, Land Bank of the Philippines, and Union Bank of the Philippines.<br>Other selling agents were BDO Capital and Investment Corp. and First Metro Investment Corp.<br>The RDBs are set to be issued on Oct. 11, 2023.

The government has successfully raised $611.2 million through the sale of retail dollar bonds (RDBs), marking President Marcos' first-ever issuance of such instruments to local investors, particularly overseas Filipino workers (OFWs).

The Bureau of the Treasury had initially planned to offer $200 million worth of RDBs. However, the response exceeded expectations, with investors oversubscribing the auction by more than three times.

Consequently, the government decided to increase the allocation for the 5.5-year RDBs.

The overwhelming demand from investors resulted in a total tender of $636.2 million, highlighting a strong interest in investing in dollar-denominated bonds.

The RDBs were issued with a coupon rate of 5.750 percent, surpassing the interpolated 5.5-year bond rate based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates.

Starting on Wednesday, Sept. 27, and lasting until Friday, Oct. 6, 2023, select banks will offer the onshore RDBs to interested investors.

The authorized selling banks include Bank of the Philippine Islands, China Banking Corp., Development Bank of the Philippines, HSBC, Metropolitan Bank & Trust Co., Philippine National Bank, Land Bank of the Philippines, and Union Bank of the Philippines.

Additional selling agents for the RDBs are BDO Capital and Investment Corp. and First Metro Investment Corp.

The RDBs are scheduled to be issued on Oct. 11, 2023.

RDBs are a type of government investment that provides individuals with a fixed interest rate over a specific period and guarantees the return of their initial investment at maturity.

These bonds are part of an initiative to make government bonds accessible to retail investors.

Last Friday, Finance Secretary Benjamin E. Diokno said the Treasury was expecting to generate an initial $1 billion from this offering, with the possibility of increasing the size if there is high demand.

To attract more investors, the minimum investment requirement for the RDB has been reduced from $300 to $200. 

The Marcos administration faced challenges with the inaugural dollar retail treasury bond sale, which was initially planned for December 2022. 

It was subsequently postponed to the second quarter and then rescheduled again to the third quarter due to unfavorable market conditions.

In September 2021, the Philippines successfully conducted its first retail dollar bond sale, raising approximately $1.6 billion or P80.91 billion.

Related Tags

government borrowings retail dollar bonds Bureau of the Treasury
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