More firms seen tapping bond mart

MANILA, Philippines - More firms are expected to tap the bond market in the next six months as interest rates ease.

This was according to the latest issue of Market Call, a joint publication of First Metro Investment corp. and University of Asia and the Pacific.

“The rush of firms to tap the corporate bond/note market has been felt in the first quarter and is likely to continue until the third quarter of this year,” the report said.

According to FMIC-UAP, the fund raising has involved much larger tranches while yields are still quite favorable to issuers as spreads appear to be tightening.

“With more and larger corporate issuances and more firms hitting the single borrowers’ limit (SBLs), we expect the new issues to be aimed at retail distribution. This should also provide more liquidity to these issues, increase secondary trading, and thus improve liquidity in the secondary markets,” FMIC-UAP said.

Interest rates have eased from the initial uptick caused by the local reaction to the implementation of Fed’s tapering program.

“The domestic financial markets, which had overreacted to the start of Fed tapering in January, appears to be adjusting to situation on the ground, which continues to be marked by slightly lower yields for government securities and tighter spreads for corporate debt issues,” the report said.