First retail dollar bonds sale delayed
Rosalia de Leon
With Metro Manila currently on lockdown, the Bureau of the Treasury has delayed its plan to sell retail dollar bonds (RDBs) to small investors here and abroad for the first time this month.
National Treasurer Rosalia de Leon told reporters on Monday that while the Treasury still wanted to launch the RDBs within this year, they can no longer do so in mid-August as earlier planned.
“We will adjust with the ECQ (enhanced community quarantine). We will also monitor market developments,” De Leon said, adding that it was “not certain” yet if the RDB issuance could still be done within the current third quarter.
In a statement on Monday, the Department of Finance (DOF) said some banks already committed to support the Treasury’s forthcoming RDB sale after they “agreed to set the minimum initial deposit and average daily maintaining balance requirement to zero for those who would want to purchase these US dollar-denominated securities.”
In particular, “banks would do away with their current practice of requiring depositors to open dollar accounts with a minimum balance of $500 to $1,000 before being able to invest in the RDBs,” the DOF quoted De Leon’s recent report to Finance Secretary Carlos Dominguez III.
De Leon told Dominguez that the plan was to make the RDBs available to individual investors at a minimum of only $300, significantly lower than the minimum amount for investing in traditional US dollar-denominated bonds of $200,000.
Two types of accounts for possible RDB investors would be introduced: the straight US dollar, as well as PesoClear.
“Those who wish to invest in RDBs through the straight US dollar method would need to open US dollar accounts with a local participating bank that will serve as the cash settlement account where the interest earnings and the principal repayment at maturity will be credited to the investor,” she said. The PesoClear option, meanwhile, will allow investors to use their existing Philippine bank accounts to buy RDBs.
The proceeds from the RDB issuance will be spent on COVID-19 response.
