RTBs to attract strong demand

STRONG DEMAND is expected as the government starts offering retail Treasury bonds (RTBs) today amid the liquidity seen in the market.

On Thursday, the Bureau of the Treasury (BTr) announced it will be offering RTBs worth at least P30 billion with a five-year tenor.

The debt papers will be publicly offered from Nov. 20 to 29 and can be bought for a minimum of P5,000.

Prior to the rate-setting auction today, traders interviewed on Friday said they are expecting the offer to be thrice oversubscribed, with indicative rates likely stand at 4.5%.

“Well, they are saying that they will offer at least P30 billion, but based on the latest RTB issuance, it can go as high as P100 billion … to take advantage of the liquidity,” a trader said, noting that the 4.5% expected yield is attractive at such level.

ANZ Research had the same sentiment, saying in its weekly report that “[i]f attractively priced (as seen in the last retail bond offer in March 2017), the issue could be upsized to [P100 billion] or more.”

On Thursday, National Treasurer Rosalia V. de Leon said strong liquidity and appetite from the retail sector compelled them to offer another tranche RTBs this year.

ANZ Research added: “This should help [stabilize] sentiment in the RPGB (Philippine government bond) market which has been impacted by the BTr’s announcement in October to increase the supply pipeline in November-December.”

Meanwhile, the bond trader said that the BTr may reject high-yielding bids in the last two auctions of the year given the large volume of bids expected in the RTB offering.

“[If the RTB auction is] successful, they [might] not pursue the next two auctions [on] Dec. 7 and 21; [they might not be that] aggressive after they reach the target. They can reject the high bids,” the trader noted.

The scheduled four-year Treasury bonds offering on Nov. 21 was cancelled to give way to the RTB offering. — K.A.N. Vidal