BTr crafts rules on sale of P30-B retail T-bonds

MANILA, Philippines - The Bureau of Treasury (BTr) has crafted the guidelines on the planned sale of at least P30 billion worth of 10-year fixed rate retail treasury bonds (RTBs) next month with the aim of ensuring greater participation from individual retail investors.

RTBs aim to cater to retail investors such as individuals and corporations who are looking for a safe, affordable and high-yielding investment for their savings.  They are considered risk-free because they are direct, unconditional obligations of the government.

The bonds will be auctioned off on July 30. The interest will be paid quarterly in arrears on the last day of each three-month interest period.

Under the new guidelines, the National Treasury required dealers and selling agents to sell to individual retail investors at least 50 percent in aggregate value of its subscription or award at the primary auction at any time within the public offer period.

Each dealer is also mandated to sell to individual investors at least 20 percent of their allocation.

Failure to meet this requirement may result in the imposition by the BTr of sanctions as it may deem appropriate including the exclusion of such dealer/selling agent from participating in future issues of RTBs.

The guidelines also state that if dealers are unable to comply with this requirement, the government “shall only pay selling commission for the actual amount sold to retail investors and shall not pay any selling commission for the balance of the total sales.”

According to the BTr, sale to dealers and investment houses performing banking and/or quasi-banking functions/activities shall not be considered as retail sales.

Dealers are likewise barred from selling the RTBs to government-owned and controlled corporations and local government units.

GOCCs and LGUs may only purchase the bonds from the issuer through the over-the-counter facility of BTr on the bond’s issue date.

National Treasurer Rosalia De Leon said the government wants more individuals to participate in the RTB offering.

In the past, institutional investors get a big chunk of the RTB issued by the government.

Proceeds from the RTB offering will be used to fund government expenditures.

The offering forms part of the government’s planned P150-billion fund-raising program through the sale of government securities.