The Philippines is eyeing to offer its first ever retail dollar bond (RDB) issuance, which will allow small- and mid-sized investors to mobilize their savings and earn while helping fund the government’s recovery and resilience programs, the Bureau of the Treasury (BTr) said yesterday.
In a statement, the BTr said the RDBs are US dollar-denominated instruments that will be similar in structure to the government’s retail treasury bonds (RTB) program.
The bonds are set to be offered at a minimum placement of $300, equivalent to around P15,000, which the BTr said makes it far more accessible than the traditional US dollar bonds issued by the Republic of the Philippines that require a minimum subscription of $200,000.
The BTr said aside from relatively higher returns, the RDBs will particularly appeal to US dollar earners, as the structure mitigates foreign exchange risk on the part of investors by maintaining the original currency of their investment.
The national government will also assume the withholding tax on interest income, allowing investors to earn full interest on their principal.
“We would like to increase investors’ capacity to further diversify their investments by offering US dollar denominated instruments that can match the natural cash flows, especially for Filipinos in the USA (United States of America),” Rosalia de Leon, national treasurer, said during the RDB financial literacy session held virtually yesterday.
Aside from over-the-counter transactions, the BTr said it is looking to continue its digital push and explore the suitability of previous online channels such as its online ordering platform, Bonds.PH and the Overseas Filipino Bank mobile banking application.
“Finally, investors will have the option of doing a straight USD placement or through PesoClear wherein cash flows in RDBs are paid and received by an investor in PHP with the currency conversions done by the selling agent bank,” the BTr said.
Jose Manuel Romualdez, ambassador of the Philippines to the US, said in his video message during the financial literacy session that the issuance of these dollar denominated bonds was created especially for overseas Filipino investors and Filipino Americans.
“With a minimum investment amount of just $300, the RDB provides you with a safe and affordable investment product. Proceeds from the RDB (will) help the government’s projects for economic recovery, particularly on addressing the impact of the COVID-19 pandemic,” Romualdez said.
“Investments in the RDB also provide diversification for our retail investors aside from the usual RTBs and premyo bonds,” he added.
