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 read this article on How to Make Money in Philippine RTBs.

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.

* Want to learn more about investing in Philippine RTB? Here are UPDATED articles!

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10 thoughts on “What are Retail Treasury Bonds (RTB)?”

  1. I tried to get RTB’s once but by the time I got to the bank, no more shares were left for that particular offering. I believe that was a blessing in disguise as I ended up using my savings to buy a foreclosed property instead which is now giving me passive income/positive cashflow per month. I still think RTB’s are risk free so I’ll consider it when I have excess funds.
    .-= Jay Castillo´s latest blog ..Secrets Revealed: Investing in Foreclosures =-.

    Reply
  2. “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”

    What do you mean by an investing banking client of a bank and higher amount?

    I am a Peso-denominated Savings holder

    But I wish to deposit my 5,000

    since you said that higher amount is required, I cannot invest here?

    Reply
  3. @Reel Advice, right now, they are the current market rates so if you are to invest in RTBs, these are the only rates. If the economy picks up and interest rates start to rise, then succeeding RTB issuances may have higher rates.

    @Jay, correct. RTBs only provide diversification to an investor. If one is looking for a higher return, RTBs are definitely not the best alternative.

    @spinner, bilis nga yan maubos kasi relatively safe investment yan. In my experience, within 2-3 days after the launch of RTBs, ubos na agad yan sa mga banks.

    @anonymous, it means even if you have P5,000, most banks won’t accommodate your investment. You need to have at least P100,000 or P1 million in most cases to be able to invest in RTBs.

    Reply
  4. Thank you Mr. James

    The thing is, how come they state that 5,000 is their minimum investment though they would likely go for the higher price

    Reply
  5. @anonymous, it’s the Philippine government that wanted RTBs to be sold at “retail”, that is, for P5,000 each. However, since the government uses underwriter agents such as banks, these banks get to decide who they want to distribute the RTBs to. Unfortunately for small investors, banks want to reduce transaction costs that’s why a higher minimum investment amount is set. For these banks, it’s easier to manage one person investing P1 million rather than 200 people investing P5,000 each (P1 million total).

    Reply
  6. unfair naman kung ganun,philippine goverment launched rtb to develops savings culture specially for those in their starting phase.
    saka biglaan din ang pag aauction nila.ganu ba kadalas magkaron ng auction for rtb?
    where cld i get to know if they would be helding another auction.
    sana po me makatulong sakin.
    im just a 21 year old guy interested in investing business.
    thanks

    Reply
  7. Hi! Nice thread going on here. I’m actually researching for retail investment products and I was lamenting how I can’t seem to get a hold on them. Apparently I’m not alone.

    To the original message poster, how did you learn about the auctions? Either I’m not reading the papers enough or it’s not well publicized. It would be great to know about the corporate offerings as well.

    If well informed, I think that investing public would love those.

    Visit my blog as well. I will write a discussion on this

    Investing in the Philippine Stock Market 2.0″

    Reply
  8. mostly banks are the one profiting from this RTB. They earn profit from the governement and they also get to earn another profit from the individuals who wants to invest from RTB by asking high fees. It’s like a highway robbery, they rob you of your own money.

    Reply

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