Philippine government raises initial P85 billion from RTBs

By Aaron Michael C. Sy, Reporter

THE GOVERNMENT raised an initial P84.9 billion during Tuesday’s rate-setting auction for retail Treasury bonds (RTBs), the fourth such offering under the Marcos administration.

The two-and-a-half year bonds due 2029 fetched a coupon rate of 6.875% during the auction, with bid yields ranging from 6.5% to 6.875%.

Tenders hit P188.6 billion or more than six times the P30 billion on offer at the Bureau of the Treasury’s (BTr) first retail bond offer this year.

The coupon rate is 1 basis point (bp) higher than the 6.865% seen for the same bond series, 16.96 bps above the 6.7054% quoted for the two-year tenor but 14.91 bps below the 7.0241% quoted for the three-year bond, according to the PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System website.

It is also 87.5 bps higher than the 6% quoted for the government’s last RTB issuance in August 2025, where it raised an initial P210 billion from five-year notes.

National Treasurer Sharon P. Almanza said they chose to issue a 2.5-year bond since rates are still elevated, and market conditions remain defensive.

“Given where the rates are and how defensive the market is, we also want to make sure we are not adding costs for the government. We are hoping that by next year, rates will moderate. So, definitely, we don’t want to lock in at a very high rate,” she said during a briefing.

Ms. Almanza said the market, particularly retail investors, wants short-term tenors. “That’s why we want to be strategic and issue in this segment,” she added.

Ms. Almanza said the Treasury is aiming to raise P150 billion in new money from the latest RTBs, with additional funds expected from the bond exchange program.

She said they are also exercising active liability management to manage risks from adding more short tenors to their total debt stock.

“We haven’t really done the calculation, but we were doing active liability management (LM) exercise. So even if this will shorten our average maturity, as pointed out, we can conduct LM, meaning to say we do debt exchange and switches,” she said.

Ms. Almanza added they are still looking at issuing fresh fixed-rate Treasury notes (FXTN) this year, which will also include a form of liability management.

Still, the BTr cannot accept all offers from the exchange offer, but Ms. Almanza noted participation from the program usually ranges from 10% to 20% of the total volume for the eligible bonds.

“We also have our analysis. Some of those bonds are still at a very low coupon. So repricing all of them will be costlier for the government instead of just waiting for the maturity. We will be repricing them at 6.875%. Some of those bonds are at 4.8% or even lower. So that’s why we are looking at the cost benefit of the switch,” she said.

The RTB’s 2.5-year tenor was a function of prudence to avoid locking in elevated borrowing costs for a longer period of time amid market volatility stemming from the Middle East conflict, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Still, the initial amount raised from the rate-setting auction reflected healthy retail investor appetite, Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

“We expect total proceeds to rise further during the remaining offer period and could surpass the P100-billion mark if current subscription momentum holds,” he said.

Meanwhile, a trader said in a text message that the coupon rate hit the government’s sweet spot given indicative rates before the auction.

The public offer period for the RTBs will run until Oct. 7 unless ended earlier, while issuance and settlement date are scheduled for Oct. 12.

It also includes an exchange offer for holders of RTBs maturing on Oct. 20, 2026 (RTB 15-01), March 1, 2027 (RTB 15-02) and March 4, 2027 (RTB 05-15), as well as for holders of fixed-rate Treasury notes (FXTN) maturing on Dec. 7, 2026 (FXTN 20-13) and Jan. 4, 2027 (FXTN 03-30).

The BTr set the repurchase price for the RTB 15-01, RTN 15-02 and RTB 05-15 at 100.01%, 99.79%, and 99.59%, respectively.

The repurchase price for the FXTN 20-13 and FXTN 03-30 are at 100.3% and 100.1%, respectively.

Since the RTB was first launched in 2001, Ms. Almanza said the government has raised a cumulative P6 trillion.

Finance Secretary Frederick D. Go said 25 years of RTBs have shown that government borrowings “can serve a broader purpose.”

“It can give the Filipinos a chance to take part in financing the country’s priorities, and in the process, become more happy participants in the financial system. Ultimately, RTBs connect two important goals, helping Filipinos build their own financial future, and of course, contributing to the future of the Filipinos,” Mr. Go said in a speech on Tuesday.

The bonds are being sold in minimum denominations of P5,000 and in multiples of P5,000 thereafter, while each exchange offer will have a minimum amount of P5,000 in multiples of P0.01.

The RTBs will be available through over-the-counter placement in bank branches and digital channels such as the BTr Online Ordering Facility, the Bonds.PH mobile app, the Overseas Filipino Bank mobile banking app, and the Landbank mobile banking app.

They will also be available on GCash’s GBonds platform, and PDAX’s Bonds platform, as well as through an ATRAM PRIME account, the ATRAM PERA app, and RCBC Trust Corp.’s Investment Management Account through RCBC PULZ.