BTr eyes lower volume from potential RTB offer

By Aaron Michael C. Sy, Reporter

THE GOVERNMENT is looking to raise less from its planned retail Treasury bond (RTB) offering than in its previous sale amid elevated interest rates.

“We are not going to raise the usual volume that we’ve been raising in the past for this RTB. Definitely lower. We are not looking for a big volume for this one,” National Treasurer Sharon P. Almanza told reporters on Tuesday, adding that they will seek to raise less than half of their last issuance.

The government raised P507.16 billion from five-year notes in its last RTB issuance in August 2025. That was also the first time that RTBs were made available on GCash’s GBonds platform.

“It’s the 25^th year of RTB. Since it’s a milestone year for RTB, we want our investors to remember that this is an instrument that retail investors like or Filipinos like us, can invest in and you don’t need a big amount,” Ms. Almanza said.

“Because of the steep yield curve, we want to manage our cost,” she added.

Ms. Almanza said renewed market volatility, along with the effects of the southwest monsoon, El Niño and elevated oil prices, has raised expectations of higher inflation in September.

The National Treasurer said they are not pressured to raise a bigger volume as they still have regular auctions for the rest of the year.

“While recent market volatility may prompt investors to demand a slightly higher risk premium, the planned RTB issuance should still attract strong demand given ample domestic liquidity and the appeal of sovereign-backed investments,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

The government also canceled its issuance of fresh five-year fixed rate Treasury notes (FXTN) initially scheduled for Tuesday.

“The postponement of the FXTN issuance suggests the government is being opportunistic in timing its borrowings, seeking to avoid locking in higher long-term rates while allowing retail funding to help meet financing needs,” Mr. Asuncion said.

However, Mr. Asuncion noted higher borrowing volumes will gradually increase debt servicing costs if interest rates stay elevated for longer and reduce fiscal flexibility.

“Overall, the key challenge is not demand for the RTB itself, but managing the long-term fiscal impact of borrowing in a higher-rate environment.”

Meanwhile, Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message that investors may be wary due to market volatility and push rates up.

“Demand could remain supported by its retail investor base,” he said.

A trader said in a text message that the government could raise a minimum of P150 billion from the RTB issuance.

“For them to make sure there is demand, it should be two- to three-year papers,” the trader said, noting it could fetch a rate close to 7%.

Meanwhile, a five-year paper would have to be priced at 7.5% to ensure there is good demand, the trader added.

The Bureau of the Treasury (BTr) is also eyeing a retail dollar bond (RDB) issuance soon, with Ms. Almanza noting it is cheaper to borrow offshore due to elevated rates domestically.

“We’re also exploring another RDB since we have a maturity but it will depend. Right now, because of the very high rates domestically, it’s cheaper [to borrow] with foreign exchange,” she said.

Ms. Almanza said that they could issue RDBs around the date of the maturity, which is on Oct. 8.

The government last tapped the offshore debt market in June, when it raised $2.5 billion from a triple-tranche dollar-denominated bond and met its foreign borrowing program for the year.

It raised $550 million from five-and-a-half-year notes at a reoffer yield of 4.699%, $1.65 billion from 10-year bonds at 5.355%, and $300 million from the tap of the 2051 global bonds at 5.75%.

“A retail dollar bond would help diversify the government’s funding sources and reduce reliance on a domestic market currently characterized by elevated borrowing costs,” Mr. Asuncion said.

However, he also noted increased exposure to foreign exchange risk, as debt servicing and principal repayments become more expensive in peso terms if the peso further weakens.

“While this strategy can help optimize funding costs and tap available investor demand, the key is maintaining a prudent balance between domestic and external borrowings,” Mr. Asuncion said.

“As long as foreign currency debt remains manageable, the benefits of funding diversification can outweigh the risks, but a sustained increase in external borrowing could leave public finances more vulnerable to exchange rate swings and shifts in global market conditions,” he added.

The government borrows from local and foreign sources to help finance its budget deficit, which is capped at P1.659 trillion or 5.4% of gross domestic product this year.