PH to sell maiden blockchain-backed bonds

Tokenized Treasury Bonds

At a glance

  • The Bureau of the Treasury will launch its first tokenized bond issuance that aims to raise at least P10 billion.

  • Tokenized bonds are digital versions of traditional bonds stored on a blockchain. The issuance will take place on Monday, Nov. 20.

  • The Philippines' move follows a growing trend among Asian governments, with Hong Kong issuing $100 million in tokenized green bonds.

  • The minimum denomination for the bonds will be P10 million, targeting institutional investors.

  • The government is confident in the market demand for tokenized bonds as it represents a step towards modernizing the financial sector in the Philippines.

  • Successful implementation could lead to further advancements in digital finance and investment opportunities.

In a move towards embracing digitalization, the Bureau of the Treasury is set to launch its maiden tokenized bond issuance, aiming to raise at least P10 billion.

In a statement, the Treasury said these digital peso-denominated IOUs will be offered with a minimum denomination of P10 million, which means it caters to larger investors looking to diversify their portfolios.

The tokenized treasury bonds will be offered on Nov. 20, Monday.

The government's decision to issue tokenized bonds reflects the increasing interest of Asian countries in the tokenized bond market. In February, Hong Kong issued $100 million in tokenized green bonds.

A tokenized bond is a digital version of a regular bond. But instead of having a physical document, it exists as a digital token on a computer system called a blockchain. 

This makes it easier to buy, sell, and keep track of the bond because everything is done electronically. 

“It's kind of like how you can use a digital wallet to store and manage your money instead of carrying around physical cash,” an analyst explained. “Tokenized bonds make it simpler and more efficient to invest in bonds using technology.”

The Treasury tapped the Land Bank of the Philippines and Development Bank of the Philippines (DBP) as it issue managers.

"As part of the national government’s government securities digitalization roadmap, the maiden issuance of TTBs [tokenized Treasury bonds] aims to provide the proof of concept for the wider use of DLT [distributed ledger technology] in the government bond market,” the bureau said.

“This proof of concept will serve as the starting point of the NG’s broader agenda of democratizing investment through digital technology, significantly reducing settlement risk and friction costs, ultimately leading to a financially inclusive local bond market,” it added.