The Bureau of Treasury yesterday reported it has sold P19 billion worth of retail treasury bonds.

National Treasurer Roberto Tan said the government may opt to end the offer of three-year and five-year fixed rate Treasury bonds before its scheduled closing on July 29, because of the amount of money raised.

The government sold more than P9 billion worth of bonds to banks and financial institutions last Friday and further P10 billion yesterday, when it opened the offer to retail players.

"We have generated P10 billion already after the auction," Tan said.

The amount raised so far has already exceeded the P14 billio figure, the Treasury had planned to raise via T-bond auctions this month, but decided to scrap those auctions and sell retail bonds instead.

The retail bonds that target small local investors offer an alternative source of funding to regular debt auctions, which have recently attracted lacklustre demand.

On Monday, banks bid for only P2.77 billion pesos worth of 1-year paper, against a P3-billion offer, and the treasury has rejected institutional bids for 5-year and 7-year bonds in auctions since May.

In contrast, demand for retail bonds has been strong, with small investors flush with cash and looking for alternative investments after the local stock market lost about a third of its value this year.

Tan said institutional demand for longer-dated paper would stabilize once there was greater certainty over inflation. Last week, the central bank said annual inflation would remain at double digit levels for longer than previously thought.

Tan said proceeds of the retail bond offer will be used by the government as a "buffer for any prolonged volatility" in the second half of the year.

State-run Development Bank of the Philippines, BPI Capital Corp. and First Metro Investment Corp. were arrangers of the retail bond issue.