Philippines Considers Issuing ‘Prize Bonds’ to Individual Investors

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(Bloomberg) -- Individual investors of Philippine government bonds may soon get prizes.

Treasurer Rosalia de Leon said the country is studying issuing so-called prize bonds targeted to individual investors. Partly borrowing the idea from similar issues in Pakistan and New Zealand, the debt sales may take the form of a mix of a saving program using bonds, and a lottery.

“We’re developing some innovative structures,” de Leon told reporters. “So on top of the usual coupon that you get, there’s also an opportunity for you to win” more money or interest, she said.

These bonds are aimed at encouraging the habit of setting money aside in a nation with among the lowest saving rate in Asia. It’s also a way for the government to turn to Filipinos’ rising incomes to secure funding for planned record spending on roads, rails and ports.

The Philippines has been expanding its sources of overseas debt funding recently. It sold yuan notes for the first time last year, and issued yen debt for the first time in eight years. This year, it sold euro-denominated bonds for the first time since 2006.

“The openness to innovative methods of financing is welcome but at the moment I think current methods of financing should suffice,” said Nicholas Mapa, senior economist at ING Groep NV in Manila. “Rolling out premium or prize bonds may require a campaign on how to explain it to investors etc. which could take time.”

The Bureau of the Treasury is still discussing with its team of lawyers and bankers details of the plan including possible legal and infrastructure logjams, de Leon said.

©2019 Bloomberg L.P.

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