The Philippines government plans to raise $2 billion from the retail bonds issue. Image Credit: REUTERS

Dubai: Overseas Filipino workers will soon be able to invest in their government’s dollar retail bonds, it was announced on Tuesday.

The bonds will be offered to overseas investors, including UAE-based OFWs, by the end of this month, the country’s national treasurer Rosalia de Leon said in Dubai on Tuesday.

“As for our financing for this year, we will issue the second leg of government-issued retail dollar bonds. We have been issuing fixed-income peso bonds, but this time, we are catering to overseas Filipinos,” said Rosalia. The government plans to raise $2 billion from the retail bonds issue.

Finance secretary Benjamin Diokno announced last year that the government would raise funds from the debt market with a planned retail bond offering targeting OFWs, who can purchase bonds using e-wallets.

Diokno said: “The retail bonds are a good investment for UAE-based Filipinos looking to save for their kids’ education, for example. The investments would be used to build the country’s infrastructure.”

Rosalia was part of a high-level delegation from the Philippines in Dubai as part of their global investor roadshow, ‘The 2023 Philippine Economic Briefing’, on September 12.

National Economic and Development Authority Secretary Arsenio Balisacan pitched to investors in the UAE to consider investing in the 194 infrastructure flagship projects planned by the government. Over 30 per cent of these projects would be funded either fully or partially through public-private partnerships, said Balisacan.

Philippines plans Sukuks

Also speaking at the event, Francisco Dakila Jr., the Deputy Governor of Bangko Sentral ng Pilipinas, said the country is keen to launch the first sovereign Islamic bond, or Sukuk, by the end of Q1 2024.

“Right now, we are in a preparation stage. We are discussing (the idea) with some potential underwriters… on whether it should be a hybrid Sukuk (or any other type). We are learning more about the potential this would have for the Philippines economy. Regarding tenure size, the sweet spot would be between five to 10 years,” said Rosalia. “It would cater to our small and institutional investors,” she added.

Also commenting on the potential to issue a sovereign Islamic bond, Atty Arifa, Assistant Governor of Bangko Sentral ng Pilipinas, said, “The Sukuk issuance provides a very good momentum for the promotion of understanding of Islamic banking in the country. It sends a message that the national government is now ready to accept new investors with Islamic banking.” The Philippines only has one Islamic bank, the state-owned Al Amanah Islamic Investment Bank.

When asked if there was an interest from Middle Eastern entities to invest in the recently formed Philippines sovereign wealth fund -- Maharlika Investment Fund (MIF) -- Diokno, said, “It is too soon to make specific comments on interests from Middle Eastern investors, but the MIF needs to be operational by the end of the year. We are still in the process of organising the rules and regulations for the fund. And the deadline to recruit key people for the fund is September 29.”

However, Diokno said the economic team plans to return to the region regularly to seek out potential investors.

Status of UAE-Philippines CEPA

Commenting on the latest updates of the Comprehensive Economic Partnership Agreement (CEPA) between the two countries, Alfonso Ferdinand A. Ver, Ambassador of the Philippines to the UAE, said the two nations are very close to signing the trade agreement and could happen before this year.

“Yesterday (Monday, September 11), we met with the Minister of State for Foreign Trade, Dr. Thani bin Ahmed Al Zeyoudi and other officials from the UAE. We are currently working on a target date to sign the agreement. There were suggestions we sign it during COP28. However, we would like to see it happen as soon as possible as the agreement would open many opportunities for both nations,” said the Ambassador.

Non-oil intra-trade between the UAE and the Philippines continued to flourish in the first half of 2023, recording $506.1 million, an increase of 19.4 per cent compared to the same period in 2022.

What are retail dollar bonds?

The retail dollar bonds are part of the government’s program to make government securities available to retail investors, especially individuals. They are issued in five- and 10-year tenures, at interest rates of 1.375 per cent (five-year) and 2.25 per cent (10-year).