Cebuano investors embrace retail treasury bonds

CEBUANOS make up the second biggest buyers of Retail Treasury Bonds (RTBs) in the country.

National Treasurer Rosalia V. de Leon said they raised P8 billion in Cebu during the 19th tranche of the RTB issued by the Bureau of the Treasury (BTr) in April.

While the National Capital Region (NCR) is the biggest market for RTBs, given its wide scope and population, Cebu investors, albeit relatively smaller in number, are starting to see RTBs as an investment option, said de Leon, who was at the Radisson Blu Hotel in Cebu City yesterday for the Investors’ Briefing of the 20th RTB offering.

Playing it safe

RTBs are considered low-risk and higher-yielding investments that are issued by a government, or in this case, the BTr.

The latest RTB issuance is a five-year bond that will mature in 2022 with an interest rate of 4.625 percent. For as low as P5,000, anyone, even overseas Filipinos, expats, as well as companies and institutions, can invest on the RTB through select banks.

“You know Filipinos want to play safe (in investing) because it is hard-earned money and you want to make sure it goes back to you, and you don’t lose on your investment,” de Leon said. “The fact that it is government-issued, they are comfortable because they know that the government really honors its obligation.”


In addition, RTB investors directly contribute to the government’s “golden age of infrastructure” aspirations. The amount raised from this RTB will be used to finance the Duterte administration’s Build Build Build program.

As an investment instrument, RTBs can be positioned by the investor as his or her retirement fund, educational fund, or to finance short-term needs since it comes with a relatively higher interest rate or yield versus the traditional savings and time deposits offered by banks.

It is also considered a liquid investment instrument, which means the investor can get his money anytime without waiting for the maturity date.

Nevertheless, if the investor does not hold on to the bond until maturity, the RTB is subject to interest rate risk, depending on the prevailing market rate at the time the RTBs are sold in the secondary market.

Interest payments for the latest RTB are given quarterly, and subject to 20 percent final withholding tax. The public offer runs until Nov. 29. Issue date of the 20th RTB will be on Dec. 4.
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