Retail dollar bonds expected to be issued by the end of this year

Mariecar Jara-Puyod, Senior Reporter

Three Filipino banking and finance professionals highly recommend the second offering of retail dollar bonds (RDB2), which, among other national investment instruments, are utilised in the priority projects – education, social protection, and infrastructure development – of the Marcos Jr. Administration.

The RDBs, expected to be issued by the end of 2023, were presented at the September 13 “Financial Literacy Session on National Government’s Retail Instruments” at the Philippine Consulate General in Dubai.

Lecturers were government-owned Land Bank of the Philippines (LBP)-Investment Banking Group vice president Gonzalo Benjamin Bongolan and Overseas Filipino (OF) Bank president/chief executive officer Randolph Montesa.

In attendance was Bangko Sentral ng Pilipinas Assistant Governor Arifa Ala. National Treasurer Rosalia de Leon keynoted. Bureau of Treasury-Asset Management Service director/Research Service-Financial Markets Monitoring and Analysis Division chief Kenneth Ian Francisco, presented “The Macro-Economic Update of the Philippines.”

Real estate and stocks market investor Ann Srinivasan said the Philippine missions must heighten their financial literacy programme: “If all the requirements and benefits from RDBs were properly disseminated and explained, I do not think there is any reason for me not to get involved. I want to contribute to the jobs advocacy of my homeland.”

Francisco cited that despite elevated inflation rates due to global and domestic headwinds – “the sharp increase in the price of oil after the Russian invasion of Ukraine and international shipping costs after economies simultaneously exited their respective lockdowns; the steep prices of imported goods because of strengthened US dollar against the Philippine peso; and food supply problems,” the country has managed to stay on because of the “structural (steady) flows of OF cash remittances that amounted to $32.5 billion (Dhs117.5 billion/Php1.8 trillion) and the business process outsourcing receipts at $27.5 million (Dhs101 million/Php1.6 billion) in 2022.” Foreign direct investments (FDIs) in 2021 and 2022 were at $12 billion (Dhs44.1 billion/Php681 billion) and $9.2 billion (Dhs34 billion/Php522 billion), respectively.

“In the past five years, remittances from the UAE reached $7.6 billion (Dhs28 billion/Php431 billion), the sixth largest source of remittances while merchandise trade was almost the same amount at around $7.8 billion (Dhs29 billion/Php442 billion). We received 21,000 UAE tourists from January to August 2023 and we are a recipient of around $10 million (Dhs37 million/Php568 million) of UAE FDIs,” he added.

Francisco said economic and fiscal reforms are continually implemented: “We are confident that we have enough dollar supply or foreign currency inflows in order to pay for our import requirements such as our oil purchases and our foreign currency debt obligations including our payment to the RDBs. You do not have to worry when you invest in RDBs.”

Of the three banking professionals, Marlene Murphy, opened on Monday her dollar account for the RDBs over the virtual OF Bank, the former 1906-registered Philippine Postal Savings Bank and an LBP subsidiary: “I am grateful for the seamless, very user-friendly, very efficient process with an excellent customer service. Acquiring dollar educates and encourages every Filipino to be responsible about personal finance and wealth management. Every overseas Filipino worker and OF is a capable investor and an ideal role model for attracting FDIs. The $200 (Dhs743.60/Php11,353.60) is affordable. It is a good starter for young and new investors. As personal savings and a long-term investment, it earns a higher interest rate of above over five per cent over a period of five years than the standard of approximately one to three per cent interest rate for a savings account.”

Banker Charry DC and Lyndon Magsino, among the Financial Literacy Programme volunteers at the two Philippine missions, are bonds investors. DC is into the Retail Treasury Bond in Philippine Peso Currency. Magsino began investing in the global stock market in 2005 and in Philippine-issued bonds in 2020.

DC added: “Always invest with a purpose. For those who have medium-term goals, those with moderate risk appetite or those who have never tried investing in paper assets, RDB2 will be a very good fit.”

Chief auditor of a huge financial institution in the UAE Magsino said: “Invest in Philippine-issued bonds. It will be a help for our beloved country to develop its infrastructures and improve the funding of our government for better services. The return on investment is really good compared to the interest rates we are getting from banks for our deposits. The investment in bonds has almost no-risk as it is guaranteed and backed by the Philippine Government.”

Off the Hook managing director Rolly Brucales would incorporate the RDBs in the in-house financial literacy programme of the chain of restaurants, for the same reasons as the four.