THE Philippine government raised a total of US$1.593 billion (about P80.8 billion) from its maiden sale of Retail Dollar Bonds (RDBs), almost four times bigger than its initial target.
National Treasurer Rosalia V. De Leon reported to Finance Secretary Carlos G. Dominguez III that Filipinos from more than 30 countries, including the Cayman Islands, Papua New Guinea, and Cyprus participated in the government’s latest offering with five-year and 10-year tenors.
“We saw a total of 520 transactions through our digital channels, for a total of USD 809,200, translating to an average placement of around USD 1,500 per online/mobile transaction. Of this volume of digital placements, roughly 40 percent or USD 329,400 are PesoClear placements,” De Leon said.
Of the total amount raised from RDBs, more than half or $866.2 million was already raised during the rate-setting auction on September 15. The 5-year and 10-year tenors fetched coupon rates of 1.375 percent and 2.25 percent, respectively.
Proceeds from the sale of RDBs will be used to fund the government’s Covid-19 recovery and resilience programs. At a minimum placement of just $300 (P15,000), the RDBs are seen to be far more accessible than the traditional US dollar-denominated global bonds issued by the Philippine government which require a minimum subscription of $200,000.
Apart from the minimum investment of $300, the Treasury said investors will get to enjoy full coupon payments as the final withholding tax on interest to be assumed by the Philippine government. On top of relatively higher returns, RDBs are expected to attract US dollar earners as the structure mitigates foreign exchange risk on the part of investors by maintaining the original currency of their investment.
The Treasury said investors can choose whether to do a straight USD placement or through PesoClear, wherein cash flows in RDBs are paid and received by an investor in PHP with the currency conversions done by the selling agent bank.
The national government programmed to borrow a total of P3.1 trillion this year, most of which is expected to be raised through domestic sources.
As of end-August this year, the national government’s outstanding debt has hit a new record high of P11.64 trillion, up by more than a fifth from P9.62 trillion a year ago.