The Philippines’ outstanding local currency (LCY) bonds in the first quarter of the year rose 6.5 percent from the previous quarter as both government and corporate segments posted strong increases, according to the Asian Development Bank’s (ADB) latest report.
The ADB’s Asia Bond Monitor said the country’s outstanding LCY bonds totaled to P10.43 trillion in the first quarter of the year, posting a faster increase from the marginal growth of 0.3 percent quarter-on-quarter in the fourth quarter of 2021.
On an annual basis, the LCY bond market expanded 14.3 percent from the P9.12 trillion recorded a year ago.
Government bonds accounted for 85.5 percent of the total bond market at the end of March, while corporate bonds accounted for 14.5 percent.
Total outstanding LCY government bonds increased 6.5 percent to P8.91 trillion in the first quarter, which was quicker than the growth of 0.5 percent quarter-on-quarter recorded in the fourth quarter of 2021.
“The expansion was driven by treasury bonds and the rebound in Bangko Sentral ng Pilipinas (BSP) bill issuance,” the ADB said.
Outstanding LCY government bonds also rose 18.1 percent from the year ago level of P7.54 billion.
Meanwhile, outstanding corporate debt increased 6.6 percent quarter-on-quarter in the first quarter to P1.52 trillion, after dropping 1.3 percent quarter-on-quarter in the fourth quarter of 2021, the ADB said.
“The reversal was underpinned by high debt sales from the corporate sector during the quarter,” it added. Year-on-year, LCY corporate bonds declined 4.1 percent from the P1.58 trillion recorded a year ago.
The ADB report also said the country’s LCY government bond yields increased across all tenors between February 28 and May 15.
“The large yield increases reflect the defensive stance of investors toward government securities prompted by surging inflationary risks, the impending monetary tightening of the BSP during the review period and policy uncertainty induced by the recently concluded national elections,” the ADB said.
“On the international front, aggressive monetary policy normalization by the United States Federal Reserve and the heightened global uncertainty caused by the Russian invasion of Ukraine also contributed to the yield hikes,” it added.
