Published on November 17, 2023, 12:18 am

Cxonxt | Empowering Leaders With Strategic Insights

The Bureau of the Treasury is planning to raise P10 billion through a groundbreaking offering of peso-denominated tokenized Treasury bonds (TTBs). These bonds will be offered to qualified institutional buyers on November 20 and will be issued on November 22.

What makes TTBs unique is that they are one-year fixed-rate government securities that will be issued in the form of digital tokens. The minimum denomination for eligible investors is set at P10 million, with increments of P1 million thereafter, in line with conventional government securities offerings.

To ensure the security and integrity of these digital tokens, they will be maintained in the BTr’s Distributed Ledger Technology (DLT) Registry. This registry will run alongside the National Registry of Scripless Securities (NRoSS), which will serve as the primary registry. By adopting this dual registry structure, the BTr aims to advance its Government Securities (GS) Digitalization Roadmap and demonstrate how DLT can revolutionize the government bond market.

The introduction of TTBs aligns with the government’s vision to democratize investment through digital technology. It seeks to reduce settlement risk and friction costs while creating a financially inclusive local bond market. Rizal Commercial Banking Corp.’s Chief Economist, Michael L. Ricafort, believes that this move will enhance the government securities infrastructure and leverage cutting-edge technology for investment purposes.

Bank of the Philippine Islands’ Lead Economist Emilio S. Neri Jr. also expressed optimism about the market’s response to this innovative offering. He emphasized that TTBs provide additional options for investors while leveraging the latest investment infrastructure technology.

The bookbuilding exercise for TTBs is scheduled to begin at 9 a.m. on November 20, with bids required by 12:30 p.m. The notice of award is expected to be released no later than 2 p.m. on the same day.

Land Bank of the Philippines and Development Bank of the Philippines will serve as the issue managers for this groundbreaking offering.

This initiative builds on the BTr’s earlier internal study on tokenized bonds, which sought input from financial institutions to potentially implement tokenization for retail bonds and attract more digital investors. The Deputy Treasurer of BTr, Erwin D. Sta. Ana, explained that the plan is to initially roll out TTBs to institutional investors, followed by leveraging the technology to onboard digital investors through fractional shares.

In conclusion, the introduction of peso-denominated tokenized Treasury bonds represents a significant milestone in the evolution of government securities in the Philippines. By embracing generative AI technology and implementing blockchain-driven systems, these TTBs aim to transform investment opportunities for institutional and retail investors alike while fostering a digitally inclusive bond market.

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