Philippines Introduces $179M Tokenized Bonds Offering

A novel method has been taken by the Philippines Bureau of the Treasury, which decided to create tokenized one-year Treasury bonds valued at 10 billion pesos ($179 million). The conventional auction process, which was originally slated for November 20, has significantly changed as a result of this decision.

With minimum denominations of 10 million pesos and incremental values of 1 million pesos, the Bureau of the Treasury will only offer these tokenized bonds to institutional purchasers. A final interest rate will be disclosed for the bonds on the issuing date; they are scheduled to maturity in November 2024, according to a report by Bloomberg.

Issued by Government Banks

These tokenized bonds will be issued by state-owned financial institutions, specifically the Land Bank of the Philippines and the Development Bank of the Philippines.

In response to a query concerning the government’s view on the long-term use of tokenized real-world assets and bonds, Deputy Treasurer Erwin Sta emphasized the continuous dedication to investigating this technology. “Continue to study the technology and test how far we can take it,” was his stated goal.

The Philippines’ shift to tokenized bonds is in line with a larger pattern of Asian countries becoming more interested in the tokenized bond market. Using the tokenization technology developed by Goldman Sachs, Hong Kong adopted this strategy in February and issued $100 million in tokenized green bonds under its Green Bond Programme. Alongside other financial institutions like JPMorgan, DBS Bank, BNY Mellon, and investment company Apollo, Singapore has also jumped on the bandwagon and is working on tokenization trial projects for physical assets. In the meanwhile, the United Arab Emirates and HSBC have partnered to start the tokenization process for bonds.

This tactical change in the Philippines is a reflection of a growing understanding of the efficiency and potential advantages that tokenization may offer over conventional financial instruments.