The Bureau of the Treasury (BTr) has set the annual coupon rate of the 21st tranche of retail treasury bonds (RTBs) at 4.875 percent per annum, officials announced in a press conference on May 30.
That is slightly higher than the inflation rate of 4.5 percent announced last April. This also means that the RTBs have a higher interest rate than most mutual funds and unit investment trust funds (UITFs) available in the market, as a majority of them had annual returns lower than 4.5 percent as of May 4.
The offer period for the RTBs will last until Friday, June 8. During this period, interested investors can avail of the bonds in selected banks for a minimum investment of Php5,000. Additional placements can be made in increments of Php5,000.
The RTBs will be issued on June 13 and will mature by 2021. However, the BTr noted that details of the offer such as the timetable can be amended if deemed necessary.
This marks the fourth RTB offer under the Duterte administration and the first for 2018. The coupon rate of the latest tranche is also higher than the rates of the previous three tranches, which ranged from 3.5 percent to 4.625 percent.
The BTr also increased the size of the offer to Php66 billion, more than double the original size of Php30 billion announced last May 25. Proceeds from the bond sale will be used to fund the government's infrastructure projects.
The government frequently issues RTBs to raise capital for its projects. Previous RTB offerings have been cited by National Treasurer Rosalia V. De Leon as the government’s way of introducing different investment vehicles and raising financial awareness among the general public.
“The increasing interest of Filipinos in RTBs has been particularly encouraging,” De Leon said in a statement issued May 30. “We are delighted that more and more Filipinos are getting into the habit of investing as well as in taking part in the funding of the National Government.”
The Land Bank of the Philippines is the lead manager of the RTB offering. It is joined by BDO Capital & Investment Corp., BPI Capital Corp, Development Bank of the Philippines, Metropolitan Bank and Trust Co., and SB Capital Investment Corp. as joint issue managers.
The RTBs will be available during the offer period until June 8, 2018 from 16 qualified selling banks. Interested buyers need to have a deposit account with these banks, through which the principal and interest payments will be made.
This article was edited on May 31, 2018 to add the total size and use of proceeds of the bond offer.
Lorenzo Kyle Subido is a staff writer of Entrepreneur PH