[Interview] PDAX Bonds Info – Why The Local Exchange Offer Government Bonds

Additional reporting and interview by Michael Mislos

JV Pineda, the Chief Operating Officer and Head of Trading at Bonds.ph, as well as the Chief of Staff at the Philippine Digital Asset Exchange (PDAX), offered insights into the licensed crypto exchange’s latest offering — tokenized bonds. He detailed the concept of bonds, the reasoning for this new venture, and the advantages of investing in these bonds.

This discussion took place during a special interview for the BitPinas Webcast at the Yield Guild Games Web3 Games Summit (YGG W3GS).

What are Bonds?

Pineda clarified that the bonds available on PDAX are issued by the Bureau of Treasury. These bonds signify a commitment by one entity to repay another, in accordance with a specified interest rate. 

“A bond represents a debt obligation and usually in the Philippines (its) pay out is through a coupon in a fixed rate return which is different from equities.”

JV Pineda, PDAX

He described that in the stock market, returns come from two sources: capital appreciation and possible dividends. Meanwhile, in the case of bonds, when an investor buys a bond from an issuer, the issuer owes a debt to the investor, which is repaid according to the agreed-upon interest rate. Specifically, the PDAX bonds are backed by the government via the Bureau of the Treasury (BTr).

Why did PDAX offer bonds?

Pineda noted that alongside PDAX’s cryptocurrency and non-fungible token (NFT) services, the initiative aims to broaden financial inclusion in the Philippines. This is achieved by offering bonds that require smaller investments compared to those available through traditional banks, thus giving Filipinos a more accessible and convenient investment opportunity, Pineda emphasized.

“…and we thought that the introduction of bonds is the perfect way to do this… the introduction of bonds presents another asset class for investors. So people, depending on their risk appetite, can buy crypto or they can buy bonds”

JV Pineda, PDAX

Pineda also noted that bonds is another way for their crypto investors to preserve their assets.

In addition, PDAX’s collaboration with the BTr and the introduction of bonds on the platform seek to expand the asset options available to investors, ensuring accessibility and a more inclusive investment opportunity.

Pineda further stated that to educate investors about this product, the company’s strategy involves media partnerships, marketing initiatives, and informative content to raise awareness and educate the public about bond investments available via the platform.

What is the indicative rate of bonds in PDAX?

PDAX presents a preliminary interest rate of 6.2% for its treasury bonds with a maturity period of three months.

This means PDAX is offering an estimated annual interest rate of 6.2% to investors who buy these bonds. The maturity period of three months signifies the duration for which the bonds are held until they reach maturity, at which point investors receive their initial investment back along with the interest earned.

Moreover, the entry point for investing in these bonds is set at just ₱500, making it significantly more affordable compared to traditional bond purchases.

Buy Bonds with 6.2% interest rate or save money in a digital bank at the same rate?

[Editor’s notes – interest rates of bonds vary. At the time this article is published, the available bonds at PDAX is at 4.9%.]

“The minimum investment for bonds in other banks, it’s usually substantially higher than what we offer in the platform. So if you wanted to buy treasury bills in different banks, you can buy them for a minimum amount of ₱10 million, but in PDAX the minimum amount is only 500 pesos. So a lot of Filipinos can have access to it and buy it at a very convenient and a very minimum price,” Pineda explained.

[Note: Tokenized bonds separately offered by the Bureau of Treasury is also in partnership with PDAX, but those are not available at retail prices, unlike the one on the PDAX app.]

Furthermore, the earnings in bonds do not require the user to do multiple activities, which has been staple in some digital banks that have high interest rates.

(Read more: (December 2023) List of Digital Banks With High Interest Rates in the Philippines)

Finally, Pineda highlighted that by lowering the entry barrier, PDAX aims to make treasury bond investments more inclusive, allowing a broader range of investors, including those with smaller capital, to participate in the market.

How to buy Bonds?

1. On the PDAX app, click the “Bonds” feature on the home page. 
2. Complete the necessary form, which asks for the user’s personal information.
3. After completing the three-page personal information, click the “Proceed” button.
4. Complete the “Financial Goals” and “Investment Experience” sections. Then click “Proceed.”
5. Review the details provided, then click “Submit.”
6. Navigate to the “Trade” section of the app.
7. Choose “Bonds.” 
8. Choose the bond pair to be purchased. It usually comes with PHP pair, like BILL48/PHP. 
9. Enter the amount. 
10. Wait for the email confirmation of the transaction. The coupon to be received has the coupon date and the maturity date when the interest will be earned.

This article is published on BitPinas: [Interview] PDAX Bonds Info – Why The Local Exchange Offer Government Bonds

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