New retail Treasury bonds coming to the market in Q3
The Marcos administration plans to sell Treasury bonds (T-bonds) to small investors in the third quarter to help plug its budget deficit and repay old debts.
Speaking to reporters, Finance Secretary Ralph Recto reckoned that the Bureau of the Treasury (BTr) may raise at least P200 billion from the upcoming offering. The final details, including the tenor of the debt securities, will be released by the BTr.
The debt sale will happen as Recto also expects two more quarter-point interest rate cuts from the Bangko Sentral ng Pilipinas this year, which could help the government borrow money at much cheaper costs. The central bank has so far trimmed the local policy rate by 1.25 percentage points under the current easing cycle.
“I think we have room to cut … Depends on what happens in the US as well,” Recto said.
“But as of today, I would assume that we’re okay for two rate cuts,” he added.
The proceeds from the upcoming fundraising activity could help the government repay some of its old debts.
Data analyzed by the Inquirer showed over P813 billion in outstanding T-bonds are falling due this year. And most of those retiring peso-denominated debts were retail treasury bonds (RTB) amounting to P516.34 billion, which will mature in mid-August.
RTBs have become one of the government’s go-to sources of local borrowings to help plug its budget hole, which is projected to hit P1.6 trillion this year—or equivalent to 5.5 percent of gross domestic product.
Small investors can usually buy RTBs for a minimum amount of P5,000. National Treasurer Sharon Almanza earlier said the RTBs may be soon offered via GBonds, a platform that will allow retail investors to buy and sell government securities on e-wallet Gcash.
Almanza had said GBonds could open in the “early second half of the year.” This could help retail investors contribute to the P2.6-trillion borrowing program of the Marcos administration for 2025.
Recto previously said the government would continue to favor onshore sources of debt to mitigate any foreign exchange risks that may come with holding too much foreign obligations.
Last year, the BTr was able to borrow P584.86 billion via RTBs.
