Finance Secretary Carlos Dominguez III urged small investors Wednesday to invest in the Philippines’ first-ever onshore retail dollar bond (RDBs) offering as this income opportunity is a “win-win proposition” that will promote financial inclusion while raising funds for the country’s economic investments and comprehensive effort to defeat the pandemic.

Dominguez said the newly launched RDBs of the Bureau of the Treasury (BTr) and the digital innovations put in place to make investing in them easier and more convenient, will allow Filipinos, especially overseas Filipino workers (OFWs), to buy government securities without having to pay out “huge commissions to brokers and traders.”

These digital innovations include the Bonds.PH, the mobile applications of the Overseas Filipino Bank (OFBank) and Land Bank of the Philippines (LandBank), and the Treasury’s Online Ordering Facility.

Bond offerings such as the RDBs will also support the development of the domestic capital markets, Dominguez said.

“The Retail Dollar Bonds will offer our small investors an outlet for diversifying their investment portfolios. They do not need to keep their dollar holdings in deposit accounts that pay minimal interest. With a minimum investment of just 300 US dollars or about 15,000 pesos, small investors can now grow their US (United States) dollar savings,” said Dominguez at the virtual launching of the RDBs.

He said shifting the buying and selling of government-issued bonds online has made investing in them “seamless and nearly friction-free.”

To enable investors to learn and understand the fundraising and debt management activities of the national government, the BTr also launched a mobile application for the public to access information about them.

“I encourage our people to invest their savings in dollar bonds. This is a win-win proposition. Retail dollar bonds provide a safe investment and income opportunity. Buying them will help raise funds for our economic investments and the nation’s comprehensive effort to defeat the pandemic,” Dominguez said.

The bonds issued by the BTr also “open up the financial system to small investors and encourages more efficient intermediation,” he added.

“Overall, this aids in restoring the vigor of the Philippine economy at the soonest possible time,” Dominguez said.

Earlier, the BTr said it has teamed up with the country’s leading banks to let small investors buy the RDBs at easy terms.

National Treasurer Rosalia de Leon said several banks have 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.

This plan to democratize dollar-bond investing means that banks would do away with their current practice of requiring depositors to open dollar accounts with a minimum balance of US$500 to US$1,000 before being able to invest in the RDBs.

The RDBs will be the first onshore US dollar-denominated bonds to be issued by the BTr in amounts of as low as US$300.

De Leon said that to offer the RDBs to the widest investor base possible, the BTr introduced two accounts for people to invest in this instrument—the straight US Dollar and PesoClear options.

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, De Leon said.

Aside from waiving the usual requirements on the opening of dollar accounts, De Leon said several banks have committed to make it easier and safer for investors of the RDBs to open US dollar accounts without having to physically go to their branches.

As for the PesoClear option, investors who do not have US dollar accounts can use their existing Philippine bank accounts to purchase the RDBs.

In the initial investment, the investor will pay the peso equivalent of the face amount of the RDBs based on the prevailing market exchange rates. During the life of the RDBs, the investor’s settlement bank will automatically convert the quarterly interest payments and principal repayment at maturity into pesos and credit these to the Philippine account of the investor, all at the market exchange rate during the transactions.

Given these structures, the BTr has started its financial literacy sessions to discuss the risks in this new instrument, especially foreign exchange risks, and ensure that investors understand the risks to their investments before purchasing RDBs.

To date, the BTr has already hosted webinars for overseas Filipinos from 20 countries in coordination with the Philippine embassies.

More financial literacy webinars will be scheduled by the BTr in the coming weeks, De Leon said.

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