NOY GOVT TO BORROW FROM OFWs VIA TREASURY BONDS (RTB) SALES

MANILA
, JUNE 27, 2011 (MANILA TIMES) By Katrina Mennen A. Valdez Reporter - FRESH from credit rating upgrades by two major debt watchers, the Aquino administration plans to borrow from overseas Filipino workers (OFWs) through the sale of global retail Treasury bonds (RTBs).

Department of Finance Secretary Cesar Purisima said in a news briefing that the Philippine government would like to “accommodate” the clamor of OFWs to invest in the domestic market, particularly in RTBs.

“There is actually a great demand from our OFWs abroad. Most of them have renewed trust and confidence in the current administration, and they are keen on investing in the domestic market,” Purisima said.

The announcement was made after Fitch Ratings Inc. lifted the Philippines’ credit rating to BBB-, or a notch below investment grade.

Earlier, Moody’s also raised the country’s credit rating. Both cited Manila’s gains in fiscal consolidation as well as its strong external payments position.

The Aquino administration earlier pronounced a plan to make the RTB part of the country’s regular borrowing program.

In March, the government sold nearly P104 billion worth of RTBs to domestic investors..

In August last year, the Bureau of the Treasury raised as much as P97 billion as against its P25-billion initial issue size.

Both RTB issuances were meant for the domestic market, with minimum purchase lots of P5,000.

The previous administration first issued global RTBs in April last year, raising $500 million.

Instead of focusing on the domestic market for the RTBs this semester, the economic team is looking at the possibility of taking it global, Purisima said.

“We have several OFWs, and most of them would like to invest into something that is more stable and secured,” he said.

“Besides raising money for the government, we also want to do the RTB global to deepen the market for Philippine papers since there is indeed a clear demand for our securities abroad,” he said.

The finance chief said US-based OFWs would be one of key investor group since 52 percent of Filipinos working abroad are in the US.

“Global RTBs is better than issuing peso-denominated bonds in the US, for example, since the regulatory requirements for bond issuance there is quite tedious and voluminous.”

Purisima, however, clarified that the plan is not necessarily to bridge the country’s budget deficit, but to drive up the Philippine economy, saying, “The intention to float global RTBs is not out of necessity but to boost our economy and deepen the market for Philippine papers.”

“This was first introduced during the previous government, and we intend to do it again,” he said.

FROM THE MONEY MARKET ASSOCIATION OF THE PHL

WHAT ARE RTBs?

Fixed Rate Treasury Notes
Product Definition

Retail Treasury Bonds (RTBs) are direct and unconditional obligations of the national government which primarily caters to the retail market or the end-users. They are issued by the Bureau of Treasury (BTr). They are interest bearing and carry a term of more than one year and can be traded in the secondary market before maturity.

Retail Treasury Bonds are safe, liquid and offer attractive returns to investors.

Features:

Issuer : National government Term : 3 and 5 years Tax feature : Interest income subject to 20% final withholding tax Type of income : Tax paid income Rate : Fixed for the life of the RTBs Coupon payment period : Payable quarterly in arrears Interest computation : Simple interest/add-on Manner of purchase : Auction or through secondary market

Retail Treasury Bonds are issued and sold at a price equal to be face value and are redeemed at maturity for the full face value of the instrument plus interest/coupon of the last period. MART website: http://www.mart.com.ph/rtb.php

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ERVIN PAOLO S. BELEN Manager Multinational Investment Bancorpoation
CAREL D. HALOG Vice President Land Bank of the Philippines
MICHAEL D. CALLEJA Senior Vice President Bank of the Philippine Islands
REUEL R. JAVIER Asst. Vice President Philippine Savings Bank
ROBERTO JUANCHITO T. DISPO EVP/Treasurer First Metro Investment Corporation
RAUL MARTIN A. PEDRO Senior Vice President Security Bank Corporation
PEDRO M. FLORESCIO, III EVP & Treasurer Banco de Oro Unibank, Inc.
PAUL JOHN T. REYES Chief Dealer & Deputy Treasurer Bank of Commerce
MANUEL ANDRES D. GOSECO SVP/Treasurer East West Banking Corporation
RAUL VICTOR B. TAN First Vice President Rizal Commercial Banking Corporation
GIDGET G. REAL Office Manager Money Market Association of the Philippines

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