The 20th issuance of the Retail Treasury Bonds (RTBs) co-managed by state-run Development Bank of the Philippines (DBP) was awarded Best Deal of the Year and Best Fixed Income Deal by an association of investment houses, a top official said.
DBP president and chief executive officer Cecilia C. Borromeo said the transaction was adjudged the best out of 15 deals vying for the Best Fixed Income award and the best among the four deals that topped their respective categories by the Investment House of the Philippines (IHAP).
“We are extremely honored for this latest recognition from IHAP,” Borromeo said. “Despite having the smallest branch network among the domestic selling agents, DBP was able to outperform its counterparts and contribute immensely to the government’s efforts to raise funds for infrastructure and social services.”
The five-year RTBs was issued by the Bureau of Treasury (BTr) at a coupon rate of 4.625 percent in November 2017 to help the National Government hike infrastructure and social services spending and mobilize public savings into a higher-yielding investment option. The transaction reached a record volume of P255.36-billion, making the RTBs oversubscribed by more than eight times the initial issue size of P30-billion and up to 40% higher than the total issue size of the three-year RTB 19 issued in April 2017.
The 20th tranche of the RTBs is the biggest capital market issuance to date with public distribution reaching more than 10,000 investors nationwide. It also generated more investments from individuals with average spending per individual investor up to P3.46-million from the P2.63-million raised in RTB 19.
Borromeo said the complexity of the deal arose from determining the "sweet spot," in terms of tenor and pricing, where the government and investors can strike a balance between cost and return, respectively, amidst a backdrop of macroeconomic turbulence. “In addition, issue managers were in a race against the impending Fed rate hike, thus the need to have the RTBs issued at the soonest time possible,” she said.
Borromeo said that despite a rising interest rate environment, the government was able to save approximately P777-billion per year in interest payments versus issuing 5-year RTBs using prevailing rates, adding: “The transaction also showcased the ability of the Republic to raise funds at record levels on a single issuance.”
Aside from DBP, the Land Bank of the Philippines was joint lead issue manager of the RTBs while BDO Capital and Investment Corporation, BPI Capital Corporation, China Bank Capital Corporation, First Metro Investment Corporation, and SB Capital Investment Corporation acted as joint issue managers.