Philippine treasury cancels five-year bonds

The government is set to sell P8.5- billion worth of five-year government securities next week.

The Treasury bureau said selling agents were allowed to submit a maximum of P5 billion orders each a day, adding that the agency is selling a maximum daily volume of P10 billion divided into P3 billion for the five-year, P3 billion for the seven-year, and P4 billion for the 10-year papers.

Another source said the demand for the RTBs has been “overwhelming” as banks have signaled to the government that they were willing to purchase as much as P160 billion to P200 billion of these IOUs.

In a text message, National Treasurer Roberto Tan said they have yet to reach a decision on the volume the government can absorb. “We’ll evaluate as we [go] through the offering period,” he said.

Last week, Tan said the government intends to sell just P25 billion to P30-billion worth of RTBs, as the government didn’t have to raise P100 billion to cover the debts maturing this month until September.

Bank sources said institutional investors have been trying to get a hold of these RTBs with the view that the Bangko Sentral ng Pilipinas is not going to hike policy rates any time soon.

Because of the high volume of money circulating in the market, financial institutions are looking for instruments where they could invest in, bank sources said.

These banks and financial institutions buy RTBs to re-sell to small investors and individuals.

The Treasury warned the selling agents that they are not allowed to offer these IOUs to government-owned and controlled corporations like the Government Service Insurance System, Social Securities System, Philippine Health Insurance Corp. and Home Development Mutual Fund and the Philippine Deposit Insurance Corp.