BTr mulls prize bonds

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    The Bureau of the Treasury (BTr) is preparing for the issuance of prize bonds with a tenor of one year. The fundraising activity gives investors the chance to win prizes as high as P1 million.

    Rosalia de Leon, national treasurer, said the offering is intended for individual investors.

    “We have the program mechanics that we are finalizing and then also in terms of the other logistics for the sort of raffle for the cash reward, we’re discussing with Land Bank in terms of putting in place the program. We used to have the ‘premyo’ savings bond,” De Leon said.

    “We’re looking at one year, with quarterly coupon payments and quarterly draws,” she added.

    Aside from the usual coupon, investors will have the opportunity to win cash prizes. De Leon said the mechanics will hopefully be finalized by the first week of November.

    “You don’t get the full coupon, but you have the opportunity to be able to get higher earnings coming out of your investment, for as low as P500. And then of course, unlike others, you get back your principal. So the principal is protected, so at the end of one year you can redeem the P500. So you’re not throwing away any good money at all,” she said, adding the investments could be in multiples of P500.

    “So right now, we’re looking at possible (prizes of) P1 million, P100,000 and P20,000.

    We’re targeting middle of November for a launch and it will continue until December.

    Instead of giving your godchildren P500 cash, you give them this investment then they can still redeem it after one year, but they have the opportunity for that higher return,” she added.

    Meanwhile, the BTr made a full award on the seven-year treasury bonds auctioned yesterday and opened the tap facility following strong demand for the government IOUs.

    “We expected that we will be receiving strong offers coming from the announcements of the central bank governor about additional liquidity that will be flushed into the system with the cut in RRR this November, then on December. Even coming from the Fed, the possible cut also in terms of the policy rates, everything is going into one direction towards easing both domestic and external,” de Leon said.

    “Also the banks, they are also expecting the maturities coming in mid-November, that’s P190 billion in maturities. We’re awashed, flushed with cash that bodes well for the reduction in terms of the rates and of course the good reception we’re getting. I think the expectations also in terms of inflation for October, that the trend would continue towards lower inflation for the month,” she added.

    The seven-year securities fetched an average rate of 4.322 percent, 18.1 basis points lower than the previous rate of 4.503 percent.

    The committee raised the full P20 billion programmed offering, with tenders reaching P56.9 billion.

    With the strong demand for the security, the committee decided to open the tap facility for further subscription of P20 billion.