Philippines Opens New Doors By Selling Tokenized Treasury Bonds During Blockchain Boom

BY Benzinga | TREASURY | 11/16/23 02:12 PM EST

Taking a major step toward a new digital financial era, the Philippines will launch tokenized treasury bonds in the next week with a one-year maturity.

What Happened: The Philippines National Government through the Bureau of Treasury plans to launch the country's first-ever offering of Philippine peso-denominated Tokenized Treasury Bonds (TTBs).

It will raise at least P10 billion ($179 million) from the domestic bond market.

The TTBs will be offered to Qualified Institutional Buyers (QIBs) as digital tokens on Nov. 20, 2023, while the issue date is scheduled for Nov. 22, 2023.

The bonds are one-year fixed-rate government securities that pay semi-annual coupons. They will be issued by the state-owned Development Bank of the Philippines and the Land Bank of the Philippines.

The TTBs will be made available in minimum denominations of P10 million and in increments of P1 million from thereon, which is like the conventional government securities offer.

Why It Matters: The Philippines will now cancel the regular bills auction.

Tokenized bonds will not only expand the debt market but will also reduce the settlement risk and friction costs. Deputy Treasurer Erwin Sta said that for the continuation and future of tokenized bonds, the department will study the technology and test how far the Philippines government can take it.

Developments In Asian Countries In February 2023, Hong Kong issued $103 million in tokenized green bonds. The Monetary Authority of Singapore (MAS) collaborated with financial giants JPMorgan Chase, DBS Bank, BNY Mellon and investment firm Apollo to focus on asset tokenization.

Separately, Germany's Commerzbank AG was granted a cryptocurrency custody license yesterday. SC Ventures, the investment and innovation arm of the Standard Chartered Bank, launched a tokenization platform called Libeara.

Photo: Shutterstock

 

 

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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