Philippine Bond Market Continues To Grow

The Philippines issued a total of PHP12.5 trillion (US$213.8 billion) in bonds during the second quarter of 2024, according to the Asian Development Bank (ADB), which tracks corporate and government debt through its Asia Bond Monitor.

The Philippines' sustainable bond market was primarily driven by sustainability bonds denominated in foreign currency.

The April to June bond issuances represented a 1.9% quarter-on-quarter growth, which is slower than the 2.8% increase seen in the first quarter, according to the ADB report.

"Reduced issuance in both the government and corporate segments moderated the expansion of the Philippines' local currency bond market," the ADB reported. The ADB noted that government bonds grew by 2.8% from the previous quarter due to a lower volume of maturities, while corporate debt contracted by 7.7%.

The Philippines' sustainable bond market was primarily driven by sustainability bonds denominated in foreign currency.

The ADB further reported that in the third quarter, yields on local currency government bonds declined across most tenors, with an average drop of 52 basis points for tenors of two years and longer.

This decrease was largely due to the Bangko Sentral ng Pilipinas (BSP) easing monetary policy.

Last month, the BSP reduced its overnight reverse repurchase rate by 25 basis points to 6.25%, citing that inflation was consistent with its target path and is expected to trend downward for the remainder of 2024.

"Rising expectations of a policy rate cut by the United States Federal Reserve also contributed to the fall in domestic yields during the review period," the ADB added.