The government will start offering three-year retail Treasury bonds next week to raise at least P30 billion from the local debt market, the Treasury bureau said on Friday.
In a notice posted on its website, the agency said it would sell at least P30 billion in three-year retail bonds for three weeks starting Feb. 9 until March 4, or if closed earlier.
The bureau also opened the bond exchange offer where bondholders of FXTN 07-57, FXTN 10-53, RTB 03-09, RTB-10-03 and FXTN 10-55 can swap their current securities with the new retail bonds.
With the scheduled three-week offer of the RTB-25 due in 2024, the Treasury canceled the upcoming auction on Feb. 16 for three-year Treasury bonds.
The government offers retail Treasury bonds annually to encourage small retail investors to invest with higher returns than prevailing market rates. These are also considered low-risk investments because they are backed by the state.
There would probably be strong demand for the retail bonds because the market remained awash with cash, a bond trader said in a Viber message.
The bonds would be sold in denominations of at least P5,000, the Treasury bureau said.
The coupon will be determined during the rate-setting auction on Tuesday, and interest payments will be made quarterly.
Last year, the bureau offered the retail bonds twice, raising P310.8 billion from the sale of three-year bonds in February and an all-time high of P516.3 billion from five-year securities.
The government is looking at raising P3 trillion this year from domestic and external lenders to help fund its budget deficit that is expected to hit 8.9% of economic output.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) fully awarded the P120 billion 28-day bills it offered on Friday on robust liquidity.
Total bids reached P148.81 billion, making the auction 1.24 times oversubscribed, the central bank said in a statement.
The short-term debt fetched a weighted average interest rate of 1.6124%, down by 1.27 basis points from 1.6251% last week.
“The results of the BSP bill auction reflect very ample liquidity in the financial system,” central bank Deputy Governor Francisco Dakila, Jr. said in the statement.
“Looking ahead, the BSP’s monetary operations will remain guided by its assessment of liquidity conditions and market developments,” he added.
The central bank had been making full awards since it started selling its own securities in September. Yields ranged from 1.6% to 1.6235%, narrower than 1.6 to 1.63% at the previous auction.
The rates continued to decline despite the faster inflation in January, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. said in a text message.