THE government is looking to offer its Premyo bonds annually following the strong reception seen for its first issuance last year, where the Treasury raised nearly P5 billion via the one-year securities.
Asked on future plans for the Premyo bonds, National Treasurer Rosalia V. de Leon told reporters on Monday following the auction for Treasury bills: “Baka (Maybe) we’ll start with an annual issuance.”
Ms. De Leon said Finance Secretary Carlos G. Dominguez III is “inclined” to offer the Premyo bonds every year, noting the Finance chief has expressed optimism in a statement over the weekend.
Mr. Dominguez said in a statement on Sunday that this bond issue “will now be a “part of the government’s proactive financing strategy.”
Ms. De Leon however said they have yet to establish partnerships with possible donors for the non-cash reward pool if they will offer the papers yearly.
“It’s not only the cash reward, we also have to be able to get some of the other non-cash reward components, so (there is a) partnership with FINEX (Financial Executives of the Philippines) to discuss how we’re going to have other donations for the non-cash component,” Ms. De Leon added.
The government raised P4.961 billion via the one-year Premyo bonds during the three-week offer period last December, oversubscribed by around 65% from the initial offer of P3 billion.
With the higher volume, Ms. De Leon said they were able to expand the total cash prize pool to as much as P4.5 million from just P3 million previously.
“We are really appreciative of the reception, particularly ’yung sa mga (those from) individuals because we saw a lot of interest, particularly those who went online. So we are urging our market makers to develop their online facility para (so) we’ll be able to reach a far and wide [investor pool], to capture more individuals to join the Premyo bonds,” she said.
Ms. De Leon said the first of four quarterly draws will be held on March 18. It will be done in the presence of representatives from the Commission on Audit and the Treasury’s rewards committee for the Premyo bonds.
Premyo bonds allow small investors to invest for as little as P500 with an interest rate of three percent per annum, while the principal amount will be paid back after one year or on the maturity date.
Every P500 worth of investment translates to one raffle coupon where bondholders can win cash prizes up to P1 million and non-cash rewards such as condominium units during quarterly draws.
Sought for comment, Robinsons Bank Corp. peso debt trader Kevin S. Palma said this type of financial instrument will help promote financial inclusion and aid the government in reaching untapped small investors.
“I think the Premyo bond is a tremendous product to have should the government decide to issue those annually. It promotes financial inclusion where it could potentially reach untapped retail investors at a reasonable cost,” Mr. Palma said in a Viber message Monday.
The Department of Finance earlier said 44% of total investments in the bond sale were P5,000 and below, “indicating that the Premyo Bonds successfully reached retail investors.” — Beatrice M. Laforga