The Bureau of the Treasury (BTr) is offering a 2.5-year retail treasury bond at a 6.875 percent coupon, giving individual investors a relatively high fixed-income option as the government taps strong demand for its latest retail debt issue.
The rate for the 32nd offering of Retail Treasury Bonds (RTB 32) was set after a coupon-setting auction that generated P188.6 billion in tenders, or 6.3 times the P30 billion initial offer.
The strong demand allowed the Treasury to raise P84.9 billion during the coupon-setting exercise, underscoring investor appetite for government securities despite recent increases in local fixed-income yields.
RTB 32 will be offered to the public from Sept. 29 to Oct. 7, subject to the BTr’s discretion. Investors can subscribe for as little as P5,000, with additional investments available in increments of P5,000.
At the 6.875 percent annual coupon, a P5,000 investment would generate P343.75 in gross interest over a full year, before taxes. Interest income from the bonds is subject to a 20 percent final withholding tax, reducing the annual interest on that investment to P275 after tax, assuming the full-year coupon accrues.
The offer gives retail investors access to the same sovereign credit that underpins the government’s borrowing program, while locking in a fixed coupon for the 2.5-year term.
For investors comparing RTB 32 with bank deposits or other fixed-income instruments, the headline coupon is only part of the equation. Taxes, holding period, liquidity, and prevailing market rates all affect the effective return.
