Success of Premyo Bonds marked by upsized issuance, larger prizes to be raffled out in 2020

January 5, 2020

The National Government, through the Bureau of the Treasury (BTr), has successfully raised P4.961 billion from the first-time sale of Premyo Bonds, or over 65 percent higher than the initial issue size of P3 billion.

The three-week-long offer period of Premyo Bonds was met with remarkably strong demand from the investing public, including individuals and eligible institutions who make investments on behalf of their individual members, according to the BTr.

“In advanced economies, the capital markets are as deep-rooted as the economy is inclusive,” said Finance Secretary Carlos Dominguez III about the issuance. “Regardless of what their day jobs are, ordinary citizens help drive up the savings and investment rates by participating in financial products. The man-on-the-street is involved in market decisions that make the economy what it is."

Dominguez pointed out that this type of bond float now forms part of the government's proactive financing strategy and supports President Duterte's goal of financial inclusion for all Filipinos.

Dubbed "Invest Pa More, Panalo Pa More Premyo Bonds Para Sa Bayan," this prize bond float received wide participation among small savers and Overseas Filipino Workers (OFWs) with its offer of cash and other rewards on top of income from a safe investment, the BTr said.

The use of both onsite and online purchasing platforms enhanced the ease of access. Of all online transactions, more than 44 percent were investments of P5,000 and below, indicating that the Premyo Bonds successfully reached retail investors.

Those who purchased the Premyo Bonds will earn 3 percent per annum to be paid quarterly for one year.

For a minimum investment of only P500, investors have a chance to win up to P1 million every quarter. Non-cash rewards in the form of condo units and a house and lot will also be given away to the winners of the top case prize of P1 million.

Winners will receive these rewards net of all applicable taxes, fees and charges.

Investors who were previously unbanked, without access to financial services and vulnerable to predatory lending practices, opened bank deposit accounts to participate in the Premyo Bonds.

The BTr said that as of 13 December 2019, more than 1,700 new bank accounts were opened. This partial figure indicates how the Premyo Bonds and similar products can contribute to financial inclusion in the country by encouraging unbanked Filipinos to start saving and investing.

Because of the good reception of Premyo Bonds, the issue size was increased from the initial P3 billion to close to P5 billion, and the total prize pool was likewise increased from the initial P3 million to P4.5 million to be raffled out quarterly.

Instead of one winner of P1 million, 10 winners of P100,000 and fifty winners of P20,000, there will be more winners: one winner of P1 million, 15 winners of P100,000 and 100 winners of P20,000 per quarter. From 61 winners, there will now be a total of 116 winners per draw.

According to National Treasurer Rosalia De Leon, “The Premyo Bonds were intended to build on the momentum from the recent issuances of Retail Treasury Bonds, or RTBs, in which we saw an increasing trend of participation from individual investors. By designing the Premyo Bonds to include a cash and non-cash reward mechanic, our aim was to entice more individuals and institutions to directly invest in government securities.”

“By way of a proactive financial literacy campaign and enhancing access via over-the-counter and online channels, we hope to promote financial inclusion by educating investors not only about the economics of smart investing, but also about our individual roles as Filipinos in contributing to nation building by participating in government securities,” De Leon said.

“The National Government, via issuances like Premyo Bonds, reaffirms its commitment to the Filipino people to bring innovative and high-quality investment securities to enhance the ability of Filipinos to reach their aspirations and share in the success of the country”, she added.

Proceeds from the Premyo Bonds, which are now part of the National Government’s proactive financing strategy, will help fund the country’s health and educational programs, among others.

To introduce Premyo Bonds, the BTr and its partner banks conducted roadshows in key cities across the country and financial literacy sessions abroad to inform and educate the investing public on the features and mechanics of the bonds.

As a result of this initiative, about 90 percent of the initial issue amount was already taken up by individual investors during its first two weeks of offer.

The good reception was also supported by the online facility, which was initially launched during the RTB Tranche 22 issuance.

As compared to the initial online offering in the RTB 22 issuance, there were 13 times more online investors in the Premyo Bonds and there was a 6 times increase in total volume of investments made online.

This issuance also expanded the retail investor base of the National Government overseas, with online orders coming in from 12 countries, excluding the Philippines, three times that of what was reached in the RTB 22 issuance.

Premyo Bonds were made accessible via online purchase using the facilities of Land Bank of the Philippines (LandBank), Development Bank of the Philippines (DBP) and First Metro Securities Brokerage (FMSB), a member of the Metrobank group and a newcomer to online placement for government securities.

The DBP and LandBank were the Joint Lead Issue Managers for the first Premyo Bonds offering, with BDO Capital & Investment Corporation (BDO-CIC), China Bank Capital Corporation (CBCC), and First Metro Investment Corp. (FMIC) as Joint Issue Managers. DMS