The Asian Development Bank (ADB) has pegged the Philippine local currency (LCY) bond market as the fastest among growing East Asia territories.
In the Asia Bond Monitor for March of the ADB, the country’s LCY bond market grew in the final quarter of 2018 by 5.3 percent to P6.09 trillion, or $116 billion from P5.79 trillion, or $107 billion, in the third quarter. It was also 11.4 percent better than the P5.47 trillion, or $110 billion, during the same period in 2017.
Government bonds were recorded at P4.78 trillion, or $91 billion, largely due to treasury bonds.
Treasury bonds in the fourth quarter stood at P4.25 trillion, or $81 billion, while treasury bills amounted to P494 billion, or $9 billion. Bonds from other sources were valued at P34 billion, or $600 million.
Corporate bonds totaled to P1.31 trillion, or $25 billion.
“Issuances of LCY corporate bonds in the fourth quarter totaled P130.9 billion, increasing more than 150 percent from the previous quarter. Metrobank and BPI [Bank of the Philippine Islands] provided the largest issuances during the fourth quarter,” the monitor read.
“Banks increased their issuance of bonds as an alternative funding source after the Bangko Sentral ng Pilipinas [BSP] relaxed its rules to allow banks to tap the domestic capital market without prior approval from the Central Bank,” it added.
The monitor also noted the outstanding LCY corporate bonds of the top 30 issuers amounted to P1.14 trillion by end of December, and this made up 86.9 percent of the entire LCY corporate bond market. It said property giants Ayala Land and SM Prime Holdings led all issuers with LCY bonds outstanding of P112.7 billion and P93.8 billion, respectively.
State bonds also swelled as the government exploited the strong demand and issued more bonds via a tap facility.
The monitor noted the strong demand was fueled by improved investor sentiment on hopes the United States Federal Reserve would engage in fewer interest rate hikes this year and that the BSP may rein in monetary tightening.