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Philippines' sale of retail T-bonds seen to hit US$4.8b

Publication Date : 17-10-2012


Awards for the Philippine government’s maiden 25-year retail treasury bond issue is approaching 200 billion pesos (US$4.8 billion) , a record figure for the public debt flotation.

The Bureau of the Treasury has “awarded (a total of) 143 billion pesos, including the auction as of (Monday),” Deputy Treasurer Eduardo S. Mendiola said.

The amount, almost three-fourths of the 200-billion pesos target for the issuance, was reached just halfway the 10-day offer period, which closes on October 22.

After the price-setting auction last October 9, Mendiola said that for the latest batch of RTBs, the Treasury was willing to award as much as 200 billion pesos so long as there was demand.

Back then, with orders reaching 76.5 billion pesos, the Treasury awarded RTBs worth 63 billion pesos, or more than twice its original offer of 30 billion pesos.

Mendiola said the Treasury was less concerned about the ultimate volume of award for the 16th RTB flotation than the selling agents being able to serve demand from retail investors.

“The public can actually write to me [and report] banks which will refuse to sell 5,000 pesos (the minimum investment accepted),” he said, adding that the Treasury would disqualify the selling agents who would actually not service the retail investors.

Also last week, First Metro Investments Corp. and the University of Asia and the Pacific said in a joint research that yields on long-term government securities were expected to rise due to ample supply before falling back to less than 6 per cent a year toward yearend.

They said the interest rates on 20- and 25-year bonds “may have a slight upward bias (as they) ‘flood’ the market.”

“Nonetheless, after the initial   push, it is likely to soften toward the end of the year as liquidity will likely pull down the 25-year back to below 6 per cent,” FMIC and UA&P added.

As for short- and medium-term bonds, FMIC and UA&P said the outlook continued to be positive given a “very low” government borrowing programme for the fourth quarter.

“The regular issuances are likely to catch the fancy of investors who need to park their excess cash into safe and, if possible, better yielding instruments,” FMIC and UA&P said.

*US$1=41.2 pesos


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