The Bureau of the Treasury (BTr) on Tuesday set at 6.25 percent the coupon rate on the new five-year, peso-denominated, fixed-rate retail treasury bond that it will offer to the public until 23 February.
A total P212.72 billion out of the P272.71 billion bids were accepted by the BTr for the RTB due February 2029.
The bond sale, which starts Tuesday, includes an offer to existing holders of three- and five-year RTBS due next month to exchange them for the new RTBs.
The three-year RTB, issued in 2021, has a coupon of 2.375 percent with a face amount of P463.32 billion while the five-year RTB issued in 2019 has a coupon of 6.250 percent with a face value of P235.92 billion.
By giving existing RTB holders the option to swap debt papers, the BTr could deliver, reduce debt service, and extend debt maturity.
Two dozen local and foreign banks have been engaged by the Bureau of Treasury as selling agents for the new RTBs due 2029.
Net of the 20 percent tax on interest earnings, a P1 million investment in the new RTB will provide a return of P250,000 over its five-year life—more than five times the usual time deposit.
The government plans a net domestic borrowing of P1.85 trillion this year to help plug a budget deficit projected to reach P1.4 trillion. The government is relying more on the domestic debt market to reduce foreign exchange risk.
