MANILA, Philippines - The Philippines will close its retail Treasury bonds (RTB) issue ahead of schedule and expects to raise a record P150 billion to P180 billion ($3.5 billion) as small investors become more confident with longer-term placements, Deputy Treasurer Eduardo Mendiola said yesterday.
“Total retail bond sales could easily reach P150 billion,” Mendiola said. The country had raised P110 billion at its last retail bond sale in October, which was a record at the time.
The response from retail investors shows they are no longer afraid of long-term investments, as a liquid secondary market in the paper offers them an exit route, he said over the telephone.
Total bond sales reached P134 billion as of Wednesday, including P49.6 billion sold at an auction on Tuesday and purchases by state firms of P16 billion, Mendiola said.
The Treasury was no longer keen on offering a second retail bond issue this year, he added.
The nine-day public offer for 5.375 percent 2027 bonds and 5.875 percent 2032 bonds was originally set to end on Feb. 29.
One of the government’s underwriters, First Metro Investment Corp. had earlier said Manila could easily top the P110 billion raised from October’s retail bond sale.
“We are looking at setting a new high here,” said First Metro Investment Corp (FMIC) president Juanchito Dispo.
FMIC is one of the issue managers tapped by the government for the RTB sale.
National Treasurer Roberto Tan said the government is very pleased with the strong demand. “ We are very pleased with the robust demand. The strong build up of volume shows deep appetite by investors for government securities that provide good returns and liquidity,’’ Tan said.
The Philippines relies heavily on local and foreign borrowing to fund its budget deficit, expected to hit 2.6 percent of GDP this year, or P279 billion year, from an estimated two percent in 2011.
Mendiola reiterated the retail bond offer was meant to provide small investors with safe investment options and should not alter the government’s local borrowing plan for the year.
Apart from First Metro Investment, BDO Capital, BPI Capital, and Deutsche Bank are issue managers of the bonds.Landbank of the Philippines, Development Bank of the Philippines, Philippine National Bank, China Banking Corp. are joint coordinators. - By Iris C. Gonzales