The government is seeing significant interest in its retail dollar bond (RDB) offer as it nears the $1 billion goal for the transaction.
“It’s been three days, but we’re seeing the demand, we’re close to the $1 billion initially that we targeted. We are confident that until next week we’ll be able to raise more than $1 billion,” Sharon Almanza, officer-in-charge treasurer of the Philippines, said in a press briefing late Friday.
The Bureau of the Treasury (BTr) launched the government’s second offering of its RDB last Wednesday with a tenor of 5.5 years and a gross interest rate of 5.75 percent per annum that is payable every quarter until its maturity in 2029.
A total of $611.2 million was raised during the price-setting auction, which was three times oversubscribed from the initial minimum amount of $200 million.
“The initial offering was $200 million… but you know, demand is close to a billion as of today. We might increase it because this bond is considered domestic so that’s okay, we (still) have some leeway in the domestic borrowing,” Finance Secretary Benjamin Diokno said.
“We haven’t really completed our domestic program. So we can still accommodate even if we reach the $1 billion during the offer period,” Almanza said.
The offer period for the RDBs is ongoing, from September 27 to October 6, with the issue date scheduled on October 11, 2023, subject to the discretion of the BTr.
“By offering US dollar-denominated instruments that can match natural cash flows, retail investors, especially our overseas Filipino community, are not only guaranteed a safeguard from potential FX risks but more importantly, an opportunity to maintain the value of their hard-earned US dollar savings. Furthermore, the national government is assuming the final withholding tax on interest for RDBs so that investors can enjoy the full fruits of their investment,” Almanza said.
“Lastly, given that the RDBs are available at a minimum of $200, this product serves as a more accessible financial instrument when compared to traditional ROPs, which are available for a minimum amount of $200,000,” she added.
In October 2021, the Philippine government raised $1.593 billion, or around P80.83 billion, through the country’s first-ever onshore RDB offering.
The BTr is also targeting to issue the Republic’s maiden Sukuk bonds within the fourth quarter of 2023.
“Before the end of (November), we will probably issue our Sukuk bonds, so we’ll go back to the Middle East to sell our Sukuk bonds,” Diokno said.
