Philippine Government Securities (GS)

o are the unconditional debt obligations of the Republic of the Philippines. These are all
denominated in the local currency, the Philippine peso. The securities are issued by the
Republic through its fiscal agent, the Bureau of Treasury.
o GS are issued to finance government spending, e.g. infrastructure and services like
health and education.
o GS may be issued in the form of discounted instruments like Treasury Bills (T-bills) or
bonds (Fixed Rate Treasury Notes or FXTNs and Retail Treasury Bonds or RTBs).
o Interest earned (coupons) on FXTNs is paid by the government semi-annually, while that
for RTBs is paid quarterly.
o Bonds generally promise to make fixed interest payments and to repay the principal
(face value) on maturity date. GS are also called "sovereign bonds".
o GS are generally considered to be "risk-free" for the following reasons:

o They are backed by the 'full faith' of the government; i.e. they have the government's
unconditional guarantee
o The risk of default from the government as issuer is considered to be virtually non-
existent because it is assumed that the government can raise taxes or print money to
pay its debt.
Fixed Rate Treasury Notes
o Fixed Rate Treasury Notes (FXTNs) are direct and unconditional obligations of the
national government. They are issued by the Bureau of Treasury (BTr).
o They are interest bearing and carry a term of more than one year and can be traded in
the secondary market before maturity. The tenors for these debt instruments can vary.
Dollar Linked Peso Notes
o Dollar Linked Peso Notes (DLPNs) are direct and unconditional obligations of the
national government and are issued by the BTr.
o They are interest bearing and carry a term of more two (2) and three (3) years and can
be traded in the secondary market before maturity.
o The notes track the movement of the Philippine Peso and US Dollar exchange rate.
Payments of interest and principal are linked to the movement of the exchange rate and
computed based on the foreign exchange factor.