Bangko Sentral ng Pilipinas governor Amando Tetangco Jr. said the government should tailor-fit the $100 million bonds it plans to offer to Overseas Filipino Workers.

Tetangco said the issue need not be "one, big issue" but must cater to the target market.

"It will be better if the issue will be simple and must answer the needs of OFWs and the sophistication of their investment approaches. The instrument should be tailored-fit to meet those," he said.

The national government plans to issue the bonds in a single offering probably by April.

The government plans to "capture" OFW remittances turn them into savings rather than used for consumption.

The bonds will mature in 2.5 years, to coincide with OFW’s usual job contracts.

Tetangco is suggesting that the offering not be a plain vanilla-type of instrument, a one-size-fits-all investment.

He said some OFWs may have simple investment needs while some may have a more advanced or sophisticated knowledge, in which case if the instrument is diversified it will be able to attract a wider range of OFWs.

Land Bank of Philippines in is the final stages of structuring the bonds, which it will sell for the national government by the second quarter. Hong Kong & Shanghai Banking Corp. is also helping in the sale.

Land Bank officials said the size may be increased, depending on the demand for the paper.

There are an estimated $15 billion in OFW savings abroad that can be tapped for this instrument, Land Bank officials said.

Land Bank is working out the hedging component for the bonds, in response to clamor from OFWs who don’t want their dollar savings eroded by the peso’s appreciation.

Land Bank officials said the bank may find a way to cover the foreign-exchange cover if the Department of Finance fails to provide the hedge.

The bond issue would also help stem the rise of the peso by soaking up some of the dollars that are sent home by overseas workers and also encourage more savings, Alex Macapagal, vice president of Land Bank said.

Filipinos are the weakest savers in Southeast Asia with a gross domestic savings rate of about 20 percent of gross domestic product, compared to around 30 percent for Vietnam, which has a smaller economy, according to data from the World Bank.

He said if the OFW bonds were issued now, they would likely fetch an annual yield of about 4 percent. The two-year T-bond was quoted at around 5.8 percent in the secondary market on Thursday.

The initial offer size could still rise depending on the demand, and the government may even do a second tranche, Macapagal said.

Landbank President Gilda Pico told reporters the bond issue would likely be linked with some foreign exchange cover to protect the OFWs.

"Without a hedge it’s easier, but that (forex guarantee) is what the OFWs are asking for," Pico said.

Macapagal said the banks involved in the bond sale would offer the hedging facility.