The Republic of the Philippines (RoP) raised a total of US$866.2 million from its inaugural retail onshore US dollar bonds (RDBs) as part of the government programme to advance financial inclusion by providing domestic investors a tool to diversify their investment portfolio. In addition, the RDBs are geared towards boosting the country’s economic recovery efforts.

The bureau of treasury awarded in an auction on September 15 US$551.8 million in five-year RDBs and US$314.4 million in 10-year RDBs with coupon rates of 1.375% and 2.250% per annum, respectively.

The auction was more than twice oversubscribed, attracting total tenders of US$938.2 million. This was up from the initial offer of US$400 million, with the auction committee subsequently deciding to upsize the acceptance of bids. The RDBs will be offered to the general investing public in minimum denominations of US$300 and in multiples of US$100 thereafter from September 15 to October 1 2021 – subject to extension or early termination at the discretion of the bureau of treasury.

The RDBs allow investors to place available funds into investment-grade US dollar-denominated securities issued by the RoP. There are two available placement methods: straight investment via US dollar accounts and via Peso Clear through select online platforms.

The government is making the RDBs more accessible by waiving the minimum initial deposit and average maintaining balance requirements for the opening of US dollar-denominated deposit accounts to be used as a settlement account by RDB investors.

Commenting on the RDBs, finance secretary Carlos Dominguez says the bonds help open up the financial system to small investors and encourage more efficient intermediation. “Buying them will also help raise funds for our economic investments and the nation’s comprehensive effort to defeat the pandemic,” he points out.

“The RDBs respond to the call for diversification of investments of the retail sector and contribute to the government’s development efforts,” adds national treasurer Rosalia de Leon. “We hope the RDBs will break new grounds for our retail treasury bond offerings.”

The Development Bank of the Philippines and the Land Bank of the Philippines were the joint lead issue managers for the RDB offering, while BDO Capital & Investment Corporation, BPI Capital Corporation, China Bank Capital Corporation, First Metro Investment Corporation, RCBC Capital Corporation, SB Capital Investment Corporation, Standard Chartered, and Union Bank of the Philippines were the joint issue managers.