Marcelo Fernan Bridge, Cebu Building a BETTER LIFE through Financial Literacy DISCLAIMER: This material is not intended for distribution to, or use by, any person or entity in any jurisdiction or county where distribution or use of such information would be contrary to law or regulation, or would, by virtue of that distribution, become subject to new or additional registration requirements.
Overseas Filipinos - Bagong Bayani OF Global Distribution $32B 2018 Personal Remittances Europe Asia All time high SG – 5.3% Americas 6% 86% 5% 10% of 2018 GDP JP – 4.9% Africa Australia HK – 6.5% 1% With 2% savi ngs Only 1/3 of OFs manage to save 37% Home Regions part of their cash remittances No savi NCR, MIN, ngs 10% [VALU 63% E] VIS, ₱ 97K [VALU Average remittance per OF E] Over six months LUZ, [VALU E] Sources: Philippine Statistics Authority, 2017 Survey of Overseas Filipinos
Financial Goals These are targets (i.e. milestones, status, things, events) in the future that require money. Travel Home Purchase Education Healthcare Family Expenses Retirement
Vision for the Philippines outlines the National Governments vision for the country. 2040 MATATAG, MAGINHAWA, AT PANATAG NA BUHAY TO LAY DOWN THE FOUNDATION FOR INCLUSIVE GROWTH, A HIGH TRUST AND RESILIENT SOCIETY, 2022 AND A GLOBALLY-COMPETITIVE KNOWLEDGE ECONOMY “MALASAKIT” “PAGBABAGO” “PATULOY NA PAG - UNLAD” ENHANCING THE SOCIAL FABRIC REDUCING INEQUALITY INCREASING GROWTH POTENTIAL Providing economic opportunities is central to the Republic’s Socio -economic Agenda
Attaining the Vision Attaining the vision involves increased public and private spending in key priority sectors. Infrastructure Social Services The Government provides for these programs via a combination of internal revenues (taxes) and borrowing.
Vision for the Philippines “We will make the next few years the golden age of infrastructure in the Philippines… and thereby spur development growth.” - President Rodrigo Duterte Total Required ₱9.0T 75 35 Flagship Approved Investment Projects (as of end-Nov 2018) 32 10 Water Resource Projects Roads and Bridges 9 6 Airports Railways 5 4 Energy Facilities Flood Control Facilities 4 3 Redevelopment Programs Seaports 3 Bus Rapid Transits Infrastructure Pipeline est. 1.7M 7.3% ₱ 1.9T Infra as % GDP Jobs Created (by 2022) (by 2022)
INVESTMENT OPTIONS Understanding your options can maximize your resources. San Juanico Bridge, Samar & Leyte
How does the government raise funds? (1 of 3) The Bureau of the Treasury formulates and implements a sustainable borrowing program using a wide array of means. Modality Features • Maturity: 91, 182, and 364 days Treasury Bills • Interest Payment: None. (Sold at a Discount) (T-Bills) • Minimum Investment: Varies from bank to bank • Higher earnings potential than Time Deposit • Can be sold easily via secondary markets • Maturity: Up to 25 years Retail Treasury Bonds • Interest Payment: Quarterly (RTBs) • Relatively higher yield over Time Deposit / CASA • Minimum Investment: Php5,000.00 • Can be sold easily via secondary markets
How does the government raise funds? (2 of 3) The Bureau of the Treasury formulates and implements a sustainable borrowing program using a wide array of means. Modality Features • Maturity: Up to 25 years Fixed Rate Treasury Notes (FXTNs) • Interest Payment: Semi-annual • Minimum Investment: Varies from bank to bank • Can be sold easily via secondary markets • Currency: US Dollar only Republic of the Philippine Bonds • Maturity: Up to 25 years (ROPs) • Interest Payment: Semi-annual • Minimum Investment: Varies from bank to bank • Can be sold easily via secondary markets
How does the government raise funds? (3 of 3) The Country’s financial strength enables it to tap foreign markets to raise funds. *Recent Issuances SAMURAI BONDS GLOBAL BONDS Amount Php73 Billion-equivalent Amount Php78 Billion-equivalent Currency Japanese Yen Currency US Dollar Tenor 3/5/10 years Tenor 10 years Interest Rate 0.38%/0.54%/0.99% p.a. Interest Rate 3.75% p.a. respectively
Illustration Treasury Bills (T-Bills) Features: • Issued by the Republic of the Philippines through the BTr • Sold at a discount • Available via banks • Tenors: 91, 182, and 364 days • Higher earnings potential than CASA or TD/SSAs Illustration: (Concept of Discount) Face Value : Php100,000.00 After 3 mos. Php1,384.00 difference Pay Receive Interest Rate : 5.550% p.a. represents interest Php98,616.00 Php100,000.00 income Tenor : 91 days or 3- months Purchase Price : 98.616 3 mos. 12 mos. Cash Outlay : Php98,616.00
Profit Dynamics: Primary Market Retail Treasury Bonds – Primary Market (New) : RTB 21 Series : ₱ 100,000.00 Face Value : ₱ 100.00 (at par) Purchase Price : June 13, 2018 Issue Date : June 13, 2021 Maturity Date : 3 Years Tenor : 4.875% p.a. (subject to 20% final withholding tax) Coupon Rate : Quarterly Coupon Frequency ₱ 100,000.00 X 4.875% Investor pays X (1-20%) = ₱ 975.00 per quarter or Return of ₱ 100,000.00 ₱ 100,000.00 ₱ 3,900.00 per annum 4 Issue Date Year 1 Year 2 Year 3 Maturity Date
Secondary Market DRAFT SLIDE TO BE UPDATED AFTER AUCTION Illustration: Client Sells RTB 21 After 2 years, market rates/prices are: Scenario A (interest rates go down 25 bps) Yield to maturity (YTM) : 4.625% Net Price (taxable) : 100.697 Scenario B (interest rates go up 25 bps) Yield to maturity (YTM) : 5.125% Net Price (taxable) : 99.309
Secondary Market DRAFT SLIDE TO BE UPDATED AFTER FEB 26 AUCTION Rates Rates ₱ 100,696.55 ₱ 99,308.90 RTB Value RTB Value 5.125% 4.625% TOTAL NET EFFECT SELLBACK GAIN TOTAL NET EFFECT TOTAL COUPONS RECEIVED TOTAL COUPONS RECEIVED SELLBACK LOSS ₱ 7,800 ₱ 7,800 Return ₱ 8,496.55 ₱ 7,108.90 ₱ 696.55 Return - ₱ 691.10 *Returns displayed assume an interest period of one year and are net of 20% final withholding tax
Historical of RTB Issuances ₱ 2.1 T RILLION ISSUED 255 FROM 2001 TO 2018 180 188 182 150 122 114 104 110 100 98 78 74 70 63 44 42 32 22 16 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Issue Size in billions of ₱ RTB Series
Previous RTB Marketing Materials RTB 21 / Jun. 2018 RTB 19 / Apr. 2017 RTB 20 / Dec. 2017 RTB 18 / Sept. 2016
EXECUTING YOUR FINANCIAL PLAN PUTTING YOUR FINANCIAL PLAN IN MOTION. Buntun Bridge, Cagayan
How to access your investment options? Banks have evolved to become a one-stop shop for financial solutions. CASA and Insurance Mutual Funds Stocks or RTBs and Time Deposits Products and UITFs Corporate Bonds Equities
What are the basic requirements? Common requirements are the following: Accomplish required documents - Account opening forms - Client Suitability Forms - Risk Disclosure Forms Two (2) valid and unexpired government-issued IDs Personal Appearance - Be prepared to answer any questions about your financial capacity and provide other necessary information to the bank, to determine client suitability.
PRIMER ON RETAIL TREASURY BONDS RTBS ARE THE BEST INTRODUCTION TO THE WORLD OF INVESTING. MRT, Manila
Key Features and Benefits of RTBs for Investors SOVEREIGN BACKING RELATIVELY HIGHER YIELD Essentially Risk Free • Higher than Time Deposits • Direct obligation of the • Republic AFFORDABLE CONVENIENT • You can transact at any major banks • Minimum investment of You can use your existing CASA as • ₱ 5,000 your settlement account • ZERO Fees EASY TO BUY AND SELL FREQUENT INTEREST Can be bought and sold PAYMENTS • on any banking day Pays interest every quarter •
Offering Process during Public Offering Period – Primary Market How to invest? Offline Online Visit any authorized Visit Selling Agent Banks www.treasury.gov.ph
Offering Process during Public Offering Period – Primary Market How to invest OFFLINE? 1 2 3 STEP STEP STEP Visit any authorized Accomplish Pay the Selling Agent Banks required forms Principal Cost • Consult an Investment Counselor • Bank Forms • ZERO Transaction Fee • Product Briefing • Acknowledgement Receipt • Proof of Investment: • Risk Profiling • Submit other documentary Confirmation of Sale (COS) requirements, as applicable.
Offering Process during Public Offering Period – Primary Market How to invest ONLINE? 1 2 3 4 STEP STEP STEP STEP Log on to Accomplish Pay the Proof of Investment www.treasury.gov.ph required ordering form Principal Cost • Input required information into • Read through the details of the • Notice of successful payment • Log on to chosen settlement Ordering Form investment before purchasing may be printed as your proof of bank's online payment facility • Select settlement bank the RTBs investment in RTBs • ZERO Transaction Fee • Once understood, click Ready to • Agree to terms and conditions • System-generated notice of Order successful payment shall be sent to your designated email address
Offering Process: Secondary Market For already-issued RTBs: 1 2 Go to any major Bank Consult a Relationship Manager STEP STEP QUOTE bill RTB 3 Ask for a quotation and 4 Documentation and Payment STEP STEP confirm if acceptable.
THANK YOU! Buntun Bridge, Cagayan
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