Stock market to trade small-issue T-bonds

The Philippine Stock Exchange will start the trading of P30.352 billion worth of the Small-Denominated Treasury (SDT) Bonds on Monday, a move that would provide a safer alternative for investors to earn amid a highly equities market.

"In line with the PSE’s corporate vision to become a full-service exchange and to provide a balanced product mix for greater flexibility and resilience, the PSE will list on Jan. 15, 2001, its first Government Security (GS)," PSE president Ramon T. Garcia said.

The SDT bonds, issued by the Bureau of Treasury of the Department of Finance, is a component of the Small and Investors Program (SIP) under which the National Government intends to issue P50 billion of peso-denominated and $500 million US dollar-denominated bonds with a term of five years and one day.

The PSE listed in July last year the outstanding P30.352 billion worth of SDT-bonds that have been successfully issued two tranches. These bonds will mature in July 2004 and come in denominations of P5,000 which will provide small savers the option to invest in a safe, high-yielding instrument.

The bonds have a fixed coupon rate of 13.625 percent per annum payable quarterly, making them relatively higher than the rates in normal savings and other fixed income securities. On top of these advantages, the SDT will be exempted from the capital gains tax, stock transaction tax and the documentary stamp tax on secondary sales.

"The listing and trading of the SDT-Bonds is an important step towards improving investors" awareness about the PSE and in increasing their participation in the securities market. This will also pave the way for the listing of other debt instruments in the Exchange and will contribute to the development of the Exchange-traded debt market," Garcia emphasized.

The listing of the SDT Bonds will make the risk-free high-yielding and affordable government papers available at the PSE as an alternative liquidity mechanism, where investors can choose to put in the funds in lieu of shares of corporate issuers.