BTr eyes PHP10B from maiden offering of tokenized T-bonds

The Bureau of the Treasury seeks to raise PHP 10 billion from the Philippines’ maiden offering of peso-denominated tokenized Treasury bonds (TTBs).

In a notice on Thursday, the BTr said it will offer the bonds to qualified institutional buyers  on Nov. 20 (Monday) and will be issued on Nov. 22.

The TTBs are one-year fixed-rate government securities that pay semi-annual coupons and will be issued in the form of digital tokens.

“The country’s first-ever TTBs will be made available to eligible investors in minimum denominations of PHP 10 million and in increments of PHP 1 million thereafter, similar to conventional government securities offers,” the Treasury said.

The digital tokens will be maintained in the BTr’s Distributed Ledger Technology (DLT) Registry. The BTr will have a dual registry structure, with the DLT Registry running in parallel with the National Registry of Scripless Securities (NRoSS). The NRoSS will serve as the primary registry.

“As part of the National Government’s Government Securities (GS) Digitalization Roadmap, the maiden issuance of TTBs aims to provide the proof of concept for the wider use of DLT in the government bond market,” the Treasury said.

It noted the TTB offering would jumpstart government’s efforts to democratize investment through digital technology by reducing settlement risk and friction costs and leading to “a financially inclusive local bond market.”

“This will level up the government securities infrastructure to become more digital and further develop the capital markets with the latest technology using the distributed ledger technology as a new/alternative registry for government securities,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Mr. Ricafort said this would give the investing public more alternatives to GS investments, while also adapting the latest technology in investment infrastructure.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said in a Viber message said the market could be highly receptive to an “innovative” offering such as the TTBs.

The bookbuilding exercise for TTBs will start at 9 a.m. on Nov. 20. Bids should be submitted no later than 12:30 p.m., while the notice of award will be released not later than 2 p.m. on the same day.

The issue managers are Land Bank of the Philippines and Development Bank of the Philippines.

In September, the BTr Deputy Treasurer Erwin D. Sta. Ana said they were conducting an internal study on the tokenized bonds with inputs from government financial institutions to potentially implement tokenization for retail bonds and attract more digital investors.

“We’d like to roll it out first to the institutional investors and then later on, to harness what this technology offers, which is to further enable fractional shares in terms of onboarding more digital investors,” he said. — Aaron Michael C. Sy