Bonds vs ‘new normal’

In my world, progress is measured in results, which we don’t.  The truth is, I’m not sure how much longer I can keep the lights on. Turns out, colossal and repeated failure tends to spook shareholders.  

-- Replicas

Under normal market conditions, people park their wealth in either cash or stocks.
    They invest their good fortunes in peso savings or time deposit accounts for peace of mind --  nominal returns, yes,  but protected by deposit insurance.

Stocks, on the other hand, are for the adventurous kind, the risk takers, the bungee jumpers. Not for the faint-hearted, these investments are for Johnny Dangerously and his kind.

But, alas, these ate not normal times – 2020 came in hot and cold with a volcanic eruption, a runaway global viral contagion, vicious political and  economic confrontations at home and abroad.

Welcome to the “new normal” -- |uncertain times, unpredictable twists and turns of global virulent economics, epidemics, and politics.

The viral onslaught is chipping away at currency and equities markets.

The peso managed to stay firm against the US dollar Monday but the main equities index fell more than six percent due to concerns on the rise of coronavirus disease 2019 cases in the country.

It ended the week’s first trading day at 50.58 from 50.64 last Friday. It traded between 50.715 and 50.54, resulting in an average of 50.626.

On the other hand, the Philippine Stock Exchange index shed 6.76 percent, or 457.77 points, to 6,312.61 points. All other indices also ended in the red, with the All Shares dropping by 5.55 percent, or 224.33 points, to 3,815.22 points.

Now, if people can’ keep cash or hold to to stocks, where can they turn to for financial security?

Try government bonds – they are unbreakable, indestructible, unsinkable.

Why?  Because the issuer never reneges on its debt. Never, no, not in yor lifetime, nyet, nein hindi, inding gador.

Consider the new component  of the government’s proactive financing strategy that is also supportive of  President Duterte’s goal of financial inclusion for all Filipinos.

Dubbed “Invest Pa More, Panalo Pa More Premyo Bonds Para Sa Bayan,” this prize bond float received wide participation among small savers and overseas Filipino workers with its offer of cash and other rewards on top of income from a safe investment, the Bureau of the Treasury said.

The national government, through the BTr  has successfully raised P4.961 billion from the first-time sale of Premyo Bonds, or over 65 percent higher than the initial issue size of P3 billion.

Those who purchased the Premyo Bonds would earn three percent per annum to be paid quarterly for one year.

For a minimum investment of only P500, investors have a chance to win up to P1 million every quarter. Non-cash rewards in the form of condo units and a house and lot would also be given away to the winners of the top case prize of P1 million.

Winners would receive these rewards net of all applicable taxes, fees and charges.

Because of strong demand, the Premyo Bonds’ issue was upsized from the initial P3 billion to close to P5 billion, and the total prize pool was raised d from the initial P3 million to P4.5 million to be raffled out quarterly.

Instead of one winner of P1 million, 10 winners of P100,000 and 50 winners of P20,000, there would be more winners: one winner of P1 million, 15 winners of P100,000 and 100 winners of P20,000 per quarter. From 61 winners, there would now be a total of 116 winners per draw.

According to National Treasurer Rosalia De Leon, “The Premyo Bonds were intended to build on the momentum from the recent issuances of Retail Treasury Bonds  in which we saw an increasing trend of participation from individual investors. By designing the Premyo Bonds to include a cash and non-cash reward mechanic, our aim was to entice more individuals and institutions to directly invest in government securities.”

Premyo Bonds were made accessible via online purchase using the facilities of Land Bank of the Philippines, Development Bank of the Philippines, and First Metro Securities Brokerage, a member of the Metrobank Group, and a newcomer to online placement for government securities.

The DBP and LandBank were the Joint Lead Issue Managers for the first Premyo Bonds offering, with BdO Capital & Investment Corp., China Bank Capital Corp., and First Metro Investment Corp. as joint issue managers.

Proceeds from the Premyo Bonds, which are now part of the national government’s proactive financing strategy, would help fund the country’s health and educational programs, among others.

“By way of a proactive financial literacy campaign and enhancing access via over-the-counter and online channels, we hope to promote financial inclusion by educating investors not only about the economics of smart investing, but also about our individual roles as Filipinos in contributing to nation building by participating in government securities,” De Leon said.

Indeed, patriotism can be a profitable proposition.

Behold God’s glory and  seek His mercy.

Pause and pray, people.