Philippine bond market fastest growing in East Asia – ADB

The Philippine Star

MANILA, Philippines — The Philippine bond market was the fastest-growing among other debt markets in the Emerging East Asia region in the fourth quarter of 2017, reflecting positive economic growth for the region and increased prospects of higher inflation, the Asian Development Bank (ADB) said.

In its latest Asia Bond Monitor, the multilateral development bank said the Philippine local currency (LCY) bond market grew at a faster pace of 12.5 percent year-on-year in the fourth quarter of 2017, with total outstanding LCY bonds at P5.475 trillion ($110 billion) versus P4.869 trillion ($98 billion) in the fourth quarter of 2016.

Government-issued bonds grew 12 percent year-on-year to P4.456 trillion ($89 billion) in the last quarter of 2017 from P3.978 trillion ($80 billion) in the comparative period in 2006.This covers treasury bills, treasury bonds and bonds issued by government agencies, entities and corporations for which repayment is guaranteed by the government. These include bonds issued by the Power Sector Assets and Liabilities Management Corp. (PSALM) and the National Food Authority (NFA), among others.

The main driver of growth during the quarter was the issuance of P255.4 billion Retail Treasury Bonds by the government in December.

Outstanding local currency corporate bonds, meanwhile, registered a 14.4 percent growth in the last quarter of 2017 to P1.020 trillion ($20 billion) from P891 billion ($18 billion) in the last quarter of 2016. Out of the total, 94 percent were sold by the top 30 corporate issuers.

The bulk of the LCY bond stock emanates from the banking industry, followed by property and holding firms.

Ayala Land remained the largest corporate bond issuer in the country in 2017, said the report.

LCY bond markets in Emerging East Asia continued to expand in the fourth quarter of 2017, reaching $12.3 trillion at the end of December.

ADB said the continued recovery in the global economy has contributed to a rally in financial markets in the region.

Emerging East Asia covers China, Hong Kong, Indonesia, Korea, Malaysia, Singapore, Thailand and Vietnam.

“Emerging East Asian markets are on a firm footing, with most countries enjoying robust growth amidst relatively stable financial market conditions,” said Yasuyuki Sawada, ADB chief economist.

“The region is well placed to withstand external uncertainties, such as sharper than expected interest rate increases by the Federal Reserve as it gradually normalizes US monetary policy, but policymakers will have to be vigilant against external shocks through prudent macrofinancial policies,” he added.


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