Here’s an investment option that will allow your money to work for you.
Securities like bonds have become a pillar of traditional investments. Fun fact: Did you know that the first US treasury bond was issued in 1917, and is still considered as one of the safest investments today? In the Philippines, treasury bills were first introduced in 1949.
And just when you think that you’ve seen what the blockchain is all about, it reveals a couple more tricks up its sleeves! No, it’s not just crypto and yes, you can still teach a dog new tricks. Treasury bonds are starting to make their way into the blockchain alongside cryptocurrencies and it might just be the future of investments.
Would you believe that the features of blockchain technology can be applied to such a robust financial instrument like treasury bonds? Now, you can reap the benefits of higher returns guaranteed by the Philippine government. This was something unavailable to most people because of high initial investments required. Now you can buy treasury bonds on the PDAX Platform for as low as Php 500. Access and transparency provided by blockchain. Can’t get any sweeter than that.
But first, let’s understand the anatomy of a treasury bond and get familiar with the terms associated with it.
What are treasury bonds?
Bonds are evidence of indebtedness issued by a corporation or government to an investor or purchaser. There are several types of bonds, one of which is a treasury bond. A treasury bond is an evidence of indebtedness issued by the Philippine Bureau of Treasury at a discount basis, at a premium, or at par payable on maturity or at coupon dates. Here are some terms that you need to be familiar with when dealing with treasury bonds!
Definition of terms
- Face, principal, par value – these terms are often used interchangeably but are simply defined as the value paid by the issuer upon the maturity date of the bond.
- Coupon rate – this is the interest rate or nominal yield paid by the issuer.
- Zero-coupon bond – this is a kind of bond that does not make interest payments. Instead, you pay a discounted rate upon purchase and received the full amount at the end of the term. Regardless if the bond is cheaper than its designated price, the investors’ return on investment is still the full amount. These are usually bonds issued by the government, such as treasury bills (T-bills) and treasury bonds (T-bonds).
- Coupon date – the date when the issuer must issue the interest payment to the investor.
- Maturity date – defined as the due date of a bond’s principal amount paid by the issuer to the investor.
- Primary market – this is where issuers offer bonds to the market for the first time. Clients can only participate during the designated offer period when buying from the primary market.
- Secondary market – buying and selling of bonds and fixed income securities take place in the secondary market. Buyers can purchase bonds that have already been issued and sellers can unwind their bond investments ahead of maturity.
Why are treasury bonds safer than other investment options?
Several factors can affect the risk level of a bond, but generally, government bonds (or treasury bonds) are considered relatively risk-free given that a country’s official government backs them. Corporate bonds and other privately-held securities like stocks have higher interest rates only because they are owned by corporations. In the event that a company closes, the return on an investor’s investment isn’t guaranteed.
In the Philippines, bonds issued by the Bureau of the Treasury of the Philippines (“BTr”) are government securities and are direct, unconditional, and general obligations of the Republic of the Philippines.
Treasury bills vs. treasury bonds: what’s the difference?
The main distinction between the two is the length of maturity per bond. T-bills are investments with a shorter maturity, while T-bonds are investments with a longer maturity (more than 1 year). Some issuers offer a 91-day maturity, while still managing to provide higher returns. Both are issued by the BTr and considered to be low-risk investments, as they are backed by the Philippine government.
Bonds as digital assets
Innovation and cutting-edge technology in the fintech industry enable traditional investment types like bonds to become digital assets. Similar to crypto, a bond that is tokenized is packed with the same features as all the assets on the blockchain. In comparison with traditional bonds, investing, buying, and selling bonds on the blockchain are decentralized and are immediately registered on a digital ledger instead of having to make arrangements with financial intermediaries like banks.
Why invest in treasury bonds through the PDAX Platform?
Digital assets are changing the way investors diversify their financial portfolio and secure financial stability.
Ownership and security are key features when it comes to digital assets. With the help of blockchain technology, users who invest in bonds that are tokenized get a record of transactions that they can keep track of any time. This process of asset tokenization also allows businesses to use a secure and clear method for transferring asset ownership. Tokenization also highlights asset liquidity and facilitates fast and cost-efficient asset trading.
With bonds as digital assets, investors can conveniently place their orders whenever and wherever they are using their mobile phones, too. With reduced transaction costs, users can forget about miscellaneous fees from brokers and banks.
Bonds are now on PDAX
Bonds are now available on PDAX, making it the first digital asset exchange to offer bonds as a digital asset in the Philippines.
Bonds on PDAX feature relatively low-risk and secure investments. Through the PDAX Platform, users can now purchase and sell treasury bills with zero-coupon rate, which means investors can get it at a discounted price with the same high face value after 91 days.
Financial investments are now more accessible to everyone with the Bonds on PDAX feature. For as little as PHP 500, you can start investing in your future.
Place orders on the blockchain 24/7 in just a few taps. Keep growing your earnings by investing in treasury bonds on PDAX to continue building your legacy.
Ready to invest in bonds?
Head to bonds.pdax.ph to purchase your first treasury bond. Visit [FAQ Link] for quick-and-easy guides on signing up and investing in treasury bonds through PDAX.
Disclaimer: This article is in relation to the availability of bonds through the PDAX Platform (powered by BONDS.PH INC.). The PDAX Platform is operated by the PHILIPPINE DIGITAL ASSET (PDAX), INC.; all services related to bonds are performed by PDAX’s broker-dealer partner, BONDS.PH INC.
The contents herein are provided for general informational purposes only and should not be considered as definitive legal, business or tax advice. Prospective purchasers or purchasers of financial products should consult their own counsel, accountants or other advisors as to legal, tax, business, financial and related aspects of the purchase of such financial product, among others.
Any investment is subject to different risks. Prospective purchasers or customers should understand and accept such risks before purchasing any financial product. To the extent allowed by law, PHILIPPINE DIGITAL ASSET (PDAX), INC. and BONDS.PH INC. do not guarantee the performance of the financial products and shall not be responsible for any loss sustained by the customer.
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