Gov't raises P15 B from first tokenized bond sale

At a glance

  • The Marcos administration raised P15 billion through the sale of tokenized Treasury bonds at a coupon rate of 6.50 percent.

  • The Bureau of the Treasury exceeded its planned target by selling more than P15 billion worth of tokenized government bonds.

  • The government's tokenized bond offering utilized a dual registry structure, combining the Distributed Ledger Technology (DLT) Registry with the National Registry of Scripless Securities.

  • Tokenized bonds are digital versions of traditional bonds stored on a blockchain system, offering convenience in buying, selling, and tracking transactions electronically.

  • The Land Bank of the Philippines and Development Bank of the Philippines (DBP) served as issue managers for the Treasury's tokenized bond issuance.

The Bureau of the Treasury has surpassed its borrowing target with the sale of the government's first tokenized bonds.

Deputy National Treasurer Erwin D. Sta. Ana reported that the government's sale of one-year tokenized Treasury bonds reached P15 billion, surpassing the initially planned amount of P10 billion.

The coupon rate for the digital peso-denominated IOUs, which were offered with a minimum denomination of P10 million, was set at 6.50 percent.

Total demand for the tokenized bonds reached P31.426 billion.

A tokenized bond is a digitized form of a traditional bond. Rather than being represented by a physical document, it is stored as a digital token on a blockchain computer system. 

This digital format simplifies the process of buying, selling, and monitoring the bond, as all transactions are conducted electronically.

In a statement, the Treasury said the issuance reflects its dedication to enhancing financial inclusion by modernizing its platforms and minimizing transaction costs. 

This, in turn, facilitates easier access for retail investors to government securities, the Treasury said.

"The success of the TTBs would not have been possible without the unwavering support of Finance Secretary Benjamin E. Diokno, Bangko Sentral ng Pilipinas (BSP) Governor Eli R. Remolona, Jr, and Monetary Board Member Rosalia V. De Leon during the transaction," the bureau said.

The Treasury appointed the Land Bank of the Philippines and the Development Bank of the Philippines (DBP) as its designated issue managers.

Diokno emphasized that the bond tokenization program aligns with the government's vision of a financially inclusive domestic capital market. 

"Through streamlining settlement procedures and minimizing friction costs, this initiative is a huge leap towards our end goal of democratizing investment and empowering our small investors," Diokno said.

For his part, Remoloan said the initiative to tokenize treasury bonds ties in with the broader digital transformation push and capital market development of the BSP.

"Our goal is to expand investment options so that more Filipinos can grow their money through these fixed-income investments while contributing directly to economic growth," Remolona said.

"Right now, the focus is on institutional investors but hopefully, we can expand this project to retail investors over time," he added.

The bonds will be stored in the Treasury’s DLT Registry. 

To facilitate the offering, a dual registry structure will be implemented, with the DLT Registry operating alongside the National Registry of Scripless Securities, which will serve as the primary registry.