What are Retail Treasury Bonds (RTB)?

The auction of the Philippine government’s P5 billion worth of Retail Treasury Bonds (RTB) is scheduled today.

What are RTBs?

The Retail Treasury Bond (RTB) is a fixed-income instrument issued by the government as a way of raising funds. Since it is backed by the Philippine government, it is generally considered a safe and liquid investment opportunity.

Why is it called “Retail”?

At a minimum investment of Php5,000 (US$105), individuals can invest here, thus the term “retail.” The problem, though, is that individuals must usually be an investment banking client of a bank in order to invest and, to become a client, a higher amount of investment is required. Some banks require at least P100,000 investment ($2,083) while some even require at least P1 million ($20,833) or P10 million ($208,333).

How do I earn from RTBs?

You receive interest coupon payments every quarter. For a detailed example of how the interest is computed, please look at our article on Philippine RTBs issued in 2008.

What are the details of the September 2009 RTB offering?

The following information about the RTBs has been forwarded to us by a Government Securities Eligible Dealer (GSED) participating in today’s auction.

• Tenor (Maturity Period): 3 years, 5 years and 7 years
• Auction Date:  September 15, 2009
• Public Offering: September 16 – 23, 2009
• Settlement Date: September 24,2009
• Coupon Rate:
• 3 years (Due 2012) – 5.25%
• 5 years (Due 2014)- 6.25%
• 7 years (Due 2016) – 7.00%

How can I invest in RTBs?

Visit a branch of your bank and inquire if they offer the RTBs. If they know nothing about it, contact directly your bank’s Trust Group usually located in the bank’s Head Office.

The joint issue coordinators of the RTB offering are Banco de Oro Universal Bank, BPI Capital, Development Bank of the Philippines, First Metro Investment Corp., Land Bank of the Philippines, Metropolitan Bank & Trust Co., and Rizal Commercial Banking Corp. so most probably they know about the RTBs.

You should read these other Investment Products:

• Philippines to issue 25-year RTBs
• What are LTNCDs: LTNCD investing explained
• Investing in Preferred Shares
• List of other Investment Products

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