Treasury bureau looking to issue tokenized bonds within the year

The Bureau of the Treasury (BTr) is looking to conduct a pilot test of tokenized bonds among government securities eligible dealers (GSED) within the year.

The BTr has not decided on the issue size, Deputy Treasurer Erwin D. Sta. Ana told reporters on Wednesday, but is looking at offering smaller denominations.

He said the denominations for the tokenized bonds could be lower than the PHP 5,000 minimum investment for retail Treasury bonds.

Tokenized bonds are exchanged digitally through a blockchain.

The tokenized bonds use a value known as a token to take the place of the securities’ sensitive data and secure them.

Mr. Sta. Ana said in a speech at the Advancing the Philippines Bond Market Conference 2023 held on Wednesday that the BTr is working on issuing a total of two tokenized bonds.

The BTr is 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’re currently studying it. We did the study to initially pilot it with institutional investors, with our GSEDs, and possibly the government institutions. Later on, once the proof of concept is okay, then we can venture into retail,” Mr. Sta. Ana said.

“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 added.

He said that the BTr will announce the pilot tokenized bond offering soon.

The BTr is also planning to issue a sukuk and a retail dollar bond before the end of the year, he added.

“The BTr is trying to introduce Sukuk bonds through the LGU (local government unit) bonds financing framework. We have launched this as well. We have been speaking with LGU executives. We have seen interest from at least three, five first-class cities, so efforts are on the way,” Mr. Sta. Ana said.

The Sukuk bond issue would mark the Philippines’ debut in the Islamic bond market.

National Treasurer Rosalia V. de Leon said last week that the securities could be issued before the end of the year or in the first quarter of 2024. — A.M.C. Sy