A government security/ies (GS) is a form of debt issued through the Bureau of the Treasury. GS are issued to finance government spending, e.g. infrastructure and services like health and education.
GS may be issued in the form of discounted instruments like Treasury Bills (T-bills) or bonds (Fixed Rate Treasury Notes or FXTNs and Retail Treasury Bonds or RTBs).
Interest earned (coupons) on FXTNs is paid by the government semi-annually, while that for RTBs is paid quarterly.
Bonds generally promise to make fixed interest payments and to repay the principal (face value) on maturity date. GS are also called "sovereign bonds".
In the Philippines, GS are issued by the Republic of the Philippines through the Bureau of the Treasury (BTr) by visiting their website www.treasury.gov.ph/?page_id=1430. GS are generally considered to be "risk-free" for the following reasons:
- They are backed by the 'full faith' of the government; i.e. they have the government's unconditional guarantee
- The risk of default from the government as issuer is considered to be virtually non-existent because it is assumed that the government can raise taxes or print money to pay its debt.
This table enumerates the available government securities with a brief description of their salient features:
Treasury Bills (T-Bills)
- Mature in less than a year: tenors available are: 91 days, 182 days, and 364 days. Treasury Bills which mature in less than 91-days are called Cash Management Bills (e.g. 35-day, 42-day).
- The number of days are based on the universal practice around the world of ensuring that the bills mature on a business day.
- Quoted either by their yield rate, which is the discount, or by their price based on 100 points per unit.
- Redeemed at par on maturity date.
|Fixed Rate Treasury Notes (FXTNs)
- Regular bonds issued by the Bureau of the Treasury
- Tenor: longer than one (1) year
- Semi-annual coupon payments
Retail Treasury Bonds (RTBs)
- Bonds issued by the Bureau of the Treasury intended for retail investors
- Mature beyond one year
- These are sold at face value on origination. The yield is represented by the coupons, expressed as a percentage of the face value on per annum basis.
- Quarterly coupon payments
Investors can purchase government securities through BPI.
If you have other questions on government securities, you may call us at these numbers:
- (02) 845-5708
- (02) 845-5505
- (02) 465-2921
- (02) 790-8927
- (02) 816-9616
You may also email us at BPI_Fixed_Income_Sales@bpi.com.ph.