By Aubrey Rose A. Inosante, Reporter

THE TREASURY’S plan to offer government securities on electronic wallet platform GCash could attract more small retail investors, analysts said.

But the platform has to be secure, reliable and cost-efficient, they added.

“Allowing the general public to purchase government securities through the GBonds platform on the GCash app would enable more Filipinos to be able to participate in the financial markets,” Ateneo School of Government Dean Philip Arnold “Randy” P. Tuaño told BusinessWorld in an e-mail.

The Philippine government is set to launch GBonds on the GCash mobile app in December, Finance Secretary Ralph G. Recto said in a speech last week.

Through the app, retail investors can buy and sell government securities using the GBonds feature.

The Bureau of the Treasury is working with the Philippine Digital Asset Exchange, Inc. (PDAX) and GCash to integrate government security investments with e-wallets.

When asked for more information on GBonds, National Treasurer Sharon P. Almanza said on Nov. 16 that the Treasury was “still working on the details.”

“I think that this will only be truly effective if the government sells security with lower denominations, similar to the denominations sold during the retail Treasury bond (RTB) sales,” Mr. Tuaño said.

RTBs are typically sold at a minimum denomination of P5,000. These are available through over-the-counter placements at bank branches and digital channels such as the Bonds.PH app and mobile banking apps of the Overseas Filipino Bank and Land Bank of the Philippines.

Mr. Tuaño said GBonds would be “less effective” if the minimum denomination is P100,000, since it would cater to relatively well-off buyers who already purchase these via banks or commercial houses.

“With more local investors purchasing lower denomination government securities, we can expect greater interest in Treasury bills as an alternative source of investments,” Mr. Tuaño said.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said by tapping into the extensive user base of GCash, the government could leverage the domestic retail market to meet its borrowing requirements.

The Treasury earlier said the National Government is looking to borrow P310 billion from the domestic market in the fourth quarter.

Mr. Arce expects borrowing costs to decrease by 10-20 basis points if retail adoption hits a significant scale of 5-10% of GCash’s user base.

GCash has over 94 million registered users.

Retail participation could bring in an additional P20 billion to P30 billion during the first bond issuance cycle in the short term, he added.

COL Financial Group, Inc. Chief Equity Strategist April Lynn C. Lee-Tan said given GCash’s large user base, more small retail investors would get a chance to buy government securities.

With GBonds, Mr. Recto previously said investing in government bonds would no longer be “a luxury but a new normal for Filipinos” and as easy as ordering their favorite food delivery.

“It can help by expanding the government’s source of funding. Government usually relies on large investors [such as] institutions and high-net-worth individuals,” Ms. Tan said.

Ms. Tan said “the caveat though is the size of the retail market for bonds is still unknown and might be small for now.”

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said GBonds would help the government’s fundraising drive as it widens the pool of investors.

“The contribution of GBonds to the government’s fundraising targets is expected to be relatively minimal in the near term since institutional investors account for the bulk of bond investments,” he said.

In addition, Mr. Colet said if investors deem the app to be risky or more costly for their investments, then they might prefer to just transact directly with banks.

However, Mr. Arce said previous issues such as the unauthorized transactions and system reconciliation problems on GCash could create hesitancy among potential retail investors.

But First Grade Finance, Inc. Managing Director Astro C. del Castillo said the recent issue was “a minor hiccup” and happens to all companies.

“GCash has an excellent track record in solving such challenges. However, addressing these security concerns effectively is crucial for restoring user confidence,” he said, adding that it ensures that retail investors feel safe and encouraged to engage in government bond investments through digital platforms.

Last week, GCash explained the issue was due to a “system reconciliation process,” and it has since been resolved by conducting “necessary wallet adjustments” to affected users.