Philippines Makes Historic Move With $270 Mln Maiden Tokenized Bond Sale

The Philippines has successfully sold $270 million worth of its maiden tokenized treasury bonds, according to a Bloomberg report. The tokenized bonds, due in November 2024 with a 6.5% coupon rate, garnered immense interest from investors. Additionally, the government of the Philippines has been lauded for showing efforts to embrace digital technology in the bond market.

Bureau of Treasury Reveals Biding Amount of Tokenized Bonds

The Bureau of Treasury (BTr) revealed that bids for the tokenized Treasury bonds (TTBs) reached a total of  31.426 billion Pesos, surpassing three times the 10 billion pesos minimum offer. This substantial demand reflects a strong appetite among institutional investors for peso-denominated tokenized assets, showcasing the effectiveness of the government’s diversification strategy.

The BTr appointed the Land Bank of the Philippines and the Development Bank of the Philippines (DBP) as issue managers for TTBs. They will oversee the issuance and the TTBs will be offered with a one-year fixed rate.

Scheduled to commence on November 20, the official offering of the tokenized bonds will begin, and the issuance will commence on November 22.

As part of the National Government’s Government Securities Digitalization Roadmap, the maiden issuance of TTBs serves as a proof of concept for the broader application of distributed ledger technology (DLT) in the government bond market. The move is aimed at reducing risks and costs associated with traditional bond transactions.

Under the Treasury’s guidelines, qualified investors can borrow a minimum of PHP10 million (US$179,229) in tokenized bonds, with increments of PHP1 million (US$17,923). Buyers had to submit their bids by around 12:30 p.m. on November 20. The authorities will announce the acceptance of proposals later on the same day.

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Philippines’s Stance on Tokenization

The Philippines now joins other countries in the region exploring tokenized real-world assets. This follows Hong Kong’s successful issuance of a HKD800 million (US$102.5 million) tokenized green bond earlier this year. Singapore, a notable financial hub, has also embraced blockchain technology, launching pilot initiatives in collaboration with institutions like JPMorgan, DBS Bank, and BNY Mellon.

BTr Deputy Treasurer Erwin Sta. Ana emphasized the importance of this proof of concept, stating that it serves as the starting point for the National Government’s broader agenda of democratizing investment through digital technology.

The initiative aims to significantly reduce settlement risks and friction costs, ultimately fostering a financially inclusive local bond market.

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