Philippines Initiates Landmark Sale of Tokenized Treasury Bonds

In a significant leap towards financial innovation, the Philippines is set to introduce tokenized treasury bonds, marking a historic move to bolster its domestic debt market. The Bureau of the Treasury has confirmed the issuance of at least 10 billion pesos ($179 million) worth of one-year tokenized bonds.

The decision to cancel the scheduled regular bills auction on the same day underscores the government’s commitment to exploring blockchain technology and embracing the potential of tokenized securities. The government retains the flexibility to adjust the issue size as deemed necessary.

This landmark issuance follows a global trend in leveraging distributed ledger technology (DLT) for raising funds. Notably, Hong Kong pioneered this approach in February, successfully offering HK$800 million of tokenized green bonds. The adoption of DLT holds the promise of enhancing liquidity and transparency in debt markets.

Deputy Treasurer Erwin Sta. Ana affirmed the government’s commitment to technological exploration, stating, “We will continue to study the technology and test how far we can take it.” The issuance will involve institutional buyers with minimum denominations of 10 million pesos and increments of 1 million pesos.

The tokenized bond, set to mature in November 2024, will see its final interest rate determined through a book-building process, with the announcement slated for November 20. The state-owned Development Bank of the Philippines and Land Bank of the Philippines will take on the crucial role of issue managers.

The move towards tokenization aims not only to reduce settlement risk but also to drive financial inclusion by creating a more accessible local bond market. With the Philippines exploring these innovative solutions, the global landscape is witnessing a transformative shift in the intersection of traditional finance and blockchain-based technologies.

Photo by Robert Mikoleit on Unsplash

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