5 things to know before investing in the Retail Treasury Bonds


The government is currently holding a fund-raising program aimed at attracting retail investors. Here are 5 things to know before participating in the 20th retail treasury bonds (RTB) issuance:

1. The Philippine Bureau of Treasury (BTr) issues two kinds of government securities (GS): treasury bills and treasury bonds. Treasury bills mature in less than a year with tenors of 91, 182 and 364 days. Treasury bonds, on the other hand, mature beyond one year with tenors of 2, 5, 7, 10 and 20 years. This issuance has a maturity of 5 years from the issue date December 4, 2017.

2. The coupon rate for this issuance is set at 4.625 percent, subject to 20 percent withholding tax. This works out to be 3.7 percent net, barely keeping up with the October inflation rate of 3.5 percent. This, however is still better than your normal deposit rates of 0.25 to 1.25 percent. Coupon is payable quarterly.

3. The BTr advertises a minimum investment amount of Php5,000. However, upon checking with our BDO branch, we were informed that the bank is offering the RTBs for a minimum amount of Phh500,000! So, it seems like it varies from bank to bank.

4. Unlike normal deposits, RTBs are not insured. However, these investments are issued directly by the Philippine government and enjoys the highest certainty of payment (since the government can just simply print more money!) so this may be considered a risk-free asset.

5. The investment is negotiable. Meaning, you can either sell your RTBs to the bank or even buy more after the offer period, at prevailing market rates.

Offer period is from November 20 to 29, 2017. Should you decide to invest in RTBs, visit your bank and make a reservation now.



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