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Philippines to Start Selling Tokenized Treasury Bonds Starting Next Week

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Philippines’ state-owned Development Bank of the Philippines and Land Bank of the Philippines serve as the issue managers for the tokenized treasury bonds.

The Philippines aims to boost its domestic debt market by introducing tokenized treasury bonds, with an initial offering of at least 10 billion pesos ($179 million). This marks the country’s first foray into the issuance of tokenized bonds. However, the government retains flexibility in adjusting the issue size.

The move aligns with the broader trend in Asia, where blockchain and tokenized securities are gaining traction for fundraising. Hong Kong set a precedent in February with a successful offering of HK$800 million in tokenized green bonds, leveraging distributed ledger technology (DLT) to enhance liquidity and transparency in debt markets.

Both state-owned, the Development Bank of the Philippines and Land Bank of the Philippines serve as the issue managers. Deputy Treasurer Erwin Sta. Ana expressed the intent to explore tokenized bonds further, stating, “We will continue to study the technology and test its limits.”

The Bureau of the Treasury plans to issue tokenized bonds due in November 2024, with a minimum denomination of 10 million pesos for institutional buyers. The final interest rate will be determined through book-building, and the announcement is scheduled for November 20.

Asian Countries Embrace Asset Tokenization

Singapore recently initiated real-world asset tokenization pilots in collaboration with JPMorgan, DBS Bank, BNY Mellon, and investment firm Apollo. The United Arab Emirates, in partnership with HSBC, is also working on the tokenization of bonds.

This reflects a broader trend of governments globally exploring blockchain-based real-world asset tokenization. Israel’s Tel Aviv stock exchange joined this movement, completing a proof-of-concept for tokenizing fiat and government bonds. The surge in interest is notably fueled by financial giants such as JPMorgan and HSBC, signifying the increasing popularity of this technology.

In a recent development, HSBC Holdings (LSE: HSBA) is gearing up to introduce a digital assets custody service in collaboration with Ripple Labs’ subsidiary Metaco. Targeted at institutional clients, the service will provide custody for tokenized securities and also has a scheduled launch next year. This offering will complement HSBC’s existing Orion digital assets issuance platform and its recently unveiled gold tokenization platform, creating a comprehensive digital asset solution tailored for institutional clients.

Digital asset management firm 21.co forecasts that the market for tokenized assets may expand to reach up to $10 trillion in the coming decade. This projection is over the ongoing adoption of blockchain technology by traditional financial institutions (TradFi).

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