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How to Buy Philippine Bills - Notes - Bonds

Discussion in 'Banking - Investing - Finances' started by Rye83, Mar 16, 2019.

  1. Rye83

    Rye83 with pastrami Secured Account Highly Rated Poster SC Connoisseur Veteran Army

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    I see the Philippines is rated at BBB. The yield on securities is around 6.2%. I have many questions but here are the big ones:
    1. How does one go about buying bonds from the Philippines government?
    2. Where can you check auction dates and history?
    3. Is this even an option for foreigners?
    4. If so, can you initiate the purchase from a foreign bank account. (And be paid back into a foreign account with direct deposit?)
    5. I'm sure I would need to report this on my taxes: would they provide me with the proper/equivalent tax documents (1099INT)?
    6. Do they have short/medium term security options? US Treasury calls these "Bills" (4 to 52 weeks) and Notes" (2 to 10 years).
    7. Have they went paperless? (Meaning this can all be done online without any physical bonds being issued/redeemed at banks?)
    Has anyone given this a go before?

    Edit: I just realized that the interest would be taxable income in the Philippines. This raises a whole slew of additional tax related questions...that would probably be best directed to my CPA. Depending on how difficult the Philippines would make this for a tourist it may not be worth the extra 3%.

    philippinesbills.png
     
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    Rye83

    Rye83 with pastrami Secured Account Highly Rated Poster SC Connoisseur Veteran Army

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    After a bit of searching I answered several of my own questions:

    1. Banks and in person transactions only. (Similar to the US before the USG figured out the internet was a thing 10-15 years ago. You may be able to work with an investment firm online, though I'm not sure on this.)
    2. You can find auction dates and historical data on the internet.
    3. ??? (I'm pretty sure foreigners can purchase bonds but this could be complicated by your visa status.)
    4. ??? (My guess is "No." I think you would need a Philippine bank account to initiate a securities purchase.)
    5. ??? (I believe US anti-double taxation laws would apply for how this income is taxed. If the Philippine rate for interest income is lower than the US rate you would pay the Philippines tax and whatever remaining percentage to the US tax rate. Example: If the Philippines tax rate on the interest income was 5% and the US tax rate on that same income was 15% you would pay 5% to the BIR and then pay the remaining 10% to the IRS, no matter what you pay at least whatever the minimum US tax rate would be. If the Philippine tax rate is over 15%, say 20%, you would pay nothing to the IRS, the full 20% would go to the Philippines. However, the Overseas Income Exclusion tax credit, aka FEIE (foreign earned income exclusion), may apply if you have spent 330 days outside of US territory...this would be prorated if you spent less than 330 days outside of the US. This gets very complicated very quickly, hire a CPA.)
    6. Yes they do, but depends on the bank. The PHG officially states they offer 4 week bills, but bank's websites seem to suggest the minimum is 12 weeks (also, a minimum P100k bond purchase).
    7. No, of course not. It's the Philippines after all. Why would they do anything that makes life easier?
     
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  3. Notmyrealname

    Notmyrealname DI Forum Patron Highly Rated Poster Showcase Reviewer

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    I heard that asking yourself a question is the very first sign of madness - answering it is the second. :smile:
     
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    Rye83

    Rye83 with pastrami Secured Account Highly Rated Poster SC Connoisseur Veteran Army

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    This is the first sign you have noticed? You should pay more attention.
     
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  5. TheDude

    TheDude DI Forum Patron Highly Rated Poster

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    Nice one, I wouldn't have thought to look there.

    I'm sure there's tons of emerging market funds you could buy into without having to go through all these hoops. Why subject yourself to the pain?
     
  6. Notmyrealname

    Notmyrealname DI Forum Patron Highly Rated Poster Showcase Reviewer

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    No - not the first, but I was too polite to say anything. Now the point has been reached. :smile:
     
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