BTr offering ‘premyo bonds‘ again in November

The Bureau of the Treasury will again sell the so-called “premyo bonds” to small investors in November, as many foreign investors are getting rid of their bond holdings due to falling interest rates in the Philippines.

During the third quarterly premyo bonds raffle draw on Friday, National Treasurer Rosalia V. de Leon said there had been clamor for another round of the prize bonds issuance, which the Treasury intended to roll out in time for the Christmas holidays.

The one-year premyo bonds sold in December last year not only provided an investment vehicle at a minimum of only P500 per bond, but also gave bondholders a chance to win cash prizes of up to P1 million or house-and-lots or condominium units for the grand prize winners per quarter.

The Treasury had raised P4.96 billion from the first batch of premyo bonds offered, which augmented funding for the government’s priority programs and projects.

For the new round of premyo bonds, de Leon said “not only will it be easier and safer to invest, but the stakes and prizes will be higher.”

Finance Secretary Carlos Dominguez III said the premyo bonds offering in November would have “bigger and more generous” prizes compared to those given away in TV game shows.

Dominguez said the next premyo bonds sale would carry the theme of “pangkabuhayan” (livelihood) as “we want the bond prizes to be effective instruments in creating job opportunities and helping Filipinos bounce back from the COVID-19 crisis.”

The Finance chief said the Treasury would make the premyo bonds available on the Bonds.PH app, which was used earlier for the sale of retail treasury bonds and they were also working to offer these IOUs to Filipinos living or working overseas through the all-digital Overseas Filipino Bank.

The government had programmed to borrow more from local sources this year, mainly through the sale of treasury bills and bonds, as the domestic financial system remained awash in cash.

In its September 2020 Asia Bond Monitor report released on Friday, the Asian Development Bank (ADB) noted that at the height of the longest and most stringent COVID-19 lockdown in the region, “the Philippines saw a decline in the foreign holdings share [of government bonds] from 3.9 percent at the end of March to 1.9 percent at the end of June.”

“With the largest cumulative rate cut through the first eight months of the year at 175 basis points (bps), the Philippines has witnessed the biggest drop in yields since March,” the ADB noted.

Given the lower rates, the ADB said foreign ownership of government bonds in the Philippines slid to its lowest level in June as “investors reduced their risk exposure during the quarter, leading to continued fund outflows against the backdrop of rising uncertainty from the pandemic and a low-interest-rate environment as the Bangko Sentral ng Pilipinas unexpectedly cut the policy rate in June by 50 bps” to a record-low of 2.25 percent.

“The Philippines incurred net outflows in April to July of $2.3 billion. The retreat of foreign funds was due to heightened risk aversion caused by a weak economic performance and slow progress in the containment of COVID-19,” the ADB said. —Ben O. de Vera