Philippine gov’t to raise $1B through ‘sukuk’ bonds

The Philippines is planning to raise $1 billion through the issuance of Sharia-compliant bonds, which would mark the government’s entry into Islamic financing.

In his weekly press chat, Finance Secretary Benjamin Diokno said the government will issue ‘sukuk’ bonds amounting to $1 billion.

“It will materialize. I can assure you,” Diokno said.

Sukuk is a financial instrument that complies with Islamic laws, by circumventing the traditional concept of interest through tying it with tangible assets or properties. Holders of sukuk bonds receive portions of earnings generated from tied assets.

During the briefing, Bureau of the Treasury officer-in-charge Sharon Almanza explained, “In sukuk, in theory, the increase in property value backs up the interest.”

Retail dollar bonds

Meanwhile, the Department of Finance’s plan to raise funds through offering dollar-denominated bonds will now materialize.

“We will launch it on September 26,” Diokno said.

The Finance chief said the plan was to initially raise $1 billion from the retail dollar bonds issuance, “but depending on the demand, it can be upsized.”

He said a retail dollar bond can be purchased for as low as $200.

“That’s tax free. That’s a good investment,” he said.

“If you are an OFW, and you want to invest, you're also helping build the Philippines,” he added. —KG, GMA Integrated News