THE National Treasury announced Wednesday the end of its regional treasury bond (RTBs) offering, after selling P70 billion worth of government securities.
The government met its target for the offering of three-year and five-year RTBs in only two and a half days starting July 18, said National Treasurer Roberto B. Tan. The offer period was supposed to end on July 29 yet.
Tan and Deputy Treasurer Eduardo S. Mendiola were supposed to be in Cebu City to hold a road show on the RTBs, but as the government securities were gobbled up faster than expected, the two ended up announcing the closure of the offering instead.
“We’re a little sad (to announce here that) we stopped the offering,” said Tan Wednesday afternoon at the Marco Polo Plaza Cebu, adding that the offering was closed in the morning.
Due to the end of the offering, the Bureau of the Treasury had to cancel its road show for Cagayan de Oro City in Mindanao, which was set yesterday.
Tan said, though, that authorized selling agents may still have some of the RTBs in this period’s offering.
Those who will purchase the bonds from selling agents can acquire the government securities at prevailing market rates. The government has authorized 13 banks and financial institutions to re-sell the RTBs.
Mendiola said that of the total proceeds, P60 billion had been acquired by private individuals and groups while P10 billion were purchased by government institutions.
Trust
Tan said the speed with which the RTBs were sold out indicated the people’s trust in the government.
Proceeds from the offering will form part of the government’s general fund, which—together with tax and non-tax revenues and foreign loans—will be used for government expenditures, such as infrastructure projects and salaries of personnel.
Tan said the National Treasury hopes to come out with regular issuances to provide opportunities to small private Filipino investors to invest in “risk-free, good paying investments.”
But in the open forum near the end of the road show, he said the Bureau of the Treasury still does not know when its next
RTB offering will be as it has to consider the government’s fiscal position at the end of the year.
Mendiola also said in the open forum that the bureau will be issuing less RTBs on the way to 2010, in line with the National Government’s goal to have a balanced budget—meaning zero deficit—and the programmed surplus by then.
He said the issuances of securities may also be more for retail, or small private investors, rather than institutions.
This month’s issuance of government securities is the 10th since 2001.
Mendiola said issuances of government securities from 2001 to 2007 resulted in total proceeds of P378.9 billion, of which P160 billion have already been paid upon maturity.
The latest issuance will mature in 2011 for the three-year RTBs and in 2013 for five-year RTBs.
Mendiola said that aside from raising funds for the National Government, the RTBs are also meant to make government securities available to small investors.
The Bureau of Treasury allows a minimum investment of P5,000 and additional investment in multiples of P5,000.
The RTBs have fixed interest rates—8.5 percent for the three-year RTBs and 9 percent for the five-year RTBs. Interest payments are made every quarter, which means that an investment of P100,000 on five-year RTBs, an investor will be paid P1,800 for every three months.
Roberto Juanchito T. Dispo, First Metro Investment Corp. executive vice president, Filipinos should invest in government securities instead of spending money on non-earning activities.
He said that while the country has a savings rate of only 27 percent of the gross domestic product, Filipinos spend P3 billion a year on personal care and P140 million a day on texting.
“If only Filipinos save more than spend. If only we can re-channel the money (on savings and government securities),” he said.
National Treasury officials assured that the government will never default on its own securities.
“The last thing the government will do is to default on its own instruments, particularly those denominated in peso,” Tan said.
Treasury officials said the government would rather borrow money to pay for the issued securities upon their maturity than default. (LAP)
