Honda targets bigger market share by yearend

By Aaron Michael C. Sy, Reporter

THE GOVERNMENT on Tuesday raised an initial P212.719 billion from its auction of the retail Treasury bonds (RTBs), the third under the Marcos administration and the 30th overall.

Meanwhile, the government is also looking to tap the offshore bond market this year to raise about $600 million, Finance Secretary Ralph G. Recto said on Tuesday.

Tenders for the RTBs at the rate-setting auction reached P272.708 billion, or more than nine times the P30 billion on offer.

The five-year retail bonds fetched a coupon rate of 6.25%. This was 12.5 basis points (bps) higher than the 6.125% quoted for the five-and-a-half-year RTBs offered in February 2023.

The RTBs’ coupon was also 11.46 bps higher than the 6.1354% quoted for the five-year debt papers at the secondary market before the auction, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

The papers were awarded at rates ranging from 5.875% to 6.25%, bringing the average to 6.156%.

Following the initial amount borrowed at Tuesday’s auction, the government has now raised a total of P5.1 trillion through RTBs since the debt instrument was introduced in the country in 2001, BTr Officer-in-Charge Sharon P. Almanza said in a speech at a launch event for the bonds on Tuesday, with retail papers accounting for a third of outstanding government securities.

The final amount raised from the 30th tranche of RTBs could reach P400 billion amid the strong demand seen from investors at the rate-setting auction and with the government also doing an exchange offer for three- and five-year retail bonds due to mature next month, Ms. Almanza said at a briefing following the event.

The BTr is offering a bond exchange option for holders of RTB 03-11, maturing on March 9, 2024, and RTB 05-12, maturing on March 12, 2024.

The Treasury is looking to raise P600 billion of its P1.8-trillion domestic borrowing program this quarter, she added.

The coupon rate fetched for the five-year RTBs was lower than expected, Ms. Almanza noted.

Meanwhile, the government is looking at borrowing “more or less” $600 million offshore, Mr. Recto said on the sidelines of Tuesday’s event, with the “timing to be determined by the Treasury.”

Ms. Almanza likewise said the Treasury has prepared the regulatory requirements for the planned offshore issuance.

“It’s just a matter of execution and when the timing’s right,” she added.

Analysts said the RTBs saw strong demand from investors looking for higher returns.

“Attractive yields drove demand, with investors lining up to lock in rates north of 6%. Rates are even more attractive, given the outlook for rates to eventually go down before the end of the year,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message.

Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. earlier said the central bank is unlikely to cut rates in the first half but could consider easing in the second semester once inflation is firmly within its 2-4% target band.

The Monetary Board raised borrowing costs by 450 bps from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%. It has since kept benchmark rates steady for two straight meetings and is expected to do the same for a third consecutive time at this week’s review.

The high demand seen for the RTBs came as players wanted to reinvest their funds, with P700 billion in government securities maturing next month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The rate was also attractive enough for investors, he said, adding that the government could raise a total of P500 billion from this tranche of retail bonds.

The public offer period for the RTBs and submission of bond exchange offers began on Tuesday and is scheduled to end on Feb. 23, unless closed earlier by the Treasury. The new retail bonds will be issued and settled on Feb. 28.

The RTBs will be sold in minimum denominations of P5,000 and in multiples of P5,000 thereafter, with a maximum investment amount of P500,000, while each exchange offer will have a minimum amount of P5,000 in multiples of P0.01.

The issue managers for the RTBs are the Development Bank of the Philippines, Land Bank of the Philippines, BDO Capital & Investment Corp., BPI Capital Corp., China Banking Corp., PNB Capital and Investment Corp., and Metropolitan Bank & Trust Company.

They are also part of the authorized selling agents for the papers, along with Australia and New Zealand Banking Group Ltd.; Asia United Bank Corp.; BDO Unibank, Inc., Citibank N.A., CTBC Bank (Philippines) Corp., East West Banking Corp., First Metro Investment Corp., ING Bank N.V., Maybank Philippines, Inc.; Bank of Commerce; Philippine Bank of Communications; Philippine National Bank; Rizal Commercial Banking Corp.; Security Bank Corp.; Standard Chartered Bank; Sterling Bank of Asia, Inc.; The Hongkong and Shanghai Banking Corp. Ltd.; and Union Bank of the Philippines, Inc.

The government’s borrowing program for this year is set at P2.4 trillion, with P1.85 trillion to be raised from the domestic market and P606.85 billion from foreign sources.

These borrowings are meant to help fund the government’s budget deficit, which is capped at 5.1% of gross domestic product this year or P1.39 trillion.

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