PHL bond market continues to expand

THE Philippine bond market continued to expand last quarter from the preceding three months and the year-ago level, the Asian Development Bank (ADB) said in a new report, with corporate bond issuances growing at a faster pace than government securities during the period.

The local securities market grew 1.4% to P4.869 trillion ($98 billion) at end- December 2016 from the P4.8 trillion in outstanding bonds recorded as of September 2016. Year on year, the debt market grew by 2.3% from P4.76 trillion at end-2015.

ADB said in the March 2017 edition of its Asia Bond Monitor report that the bond market expanded both on a quarter on quarter and year on year as of end-2016 on the back of an increase in issuances from both the government and the corporate sector.

Outstanding government issuances totalled P3.978 trillion at end-December 2016, up 0.8% from P3.946 trillion at end-2015, the report showed. It also grew 0.6% from end- September 2016’s P3.955 trillion. Broken down, this amount was made up of P288 billion in Treasury bills, P3.621 trillion in Treasury bonds and P69 billion in securities issued by government-owned and -controlled corporations.

Outstanding corporate bond issuances, meanwhile, expanded by 9.5% to P891 billion at endDecember 2016 from P814 billion the previous year. Quarter on quarter, issuances by local companies grew by 5.5% from P845 billion at end- September 2016.

ADB said 30 companies are actively tapping the bond market in the Philippines, accounting for 86.9% of total corporate bonds outstanding at end- December 2016. Ayala Land, Inc. kept its spot as the top corporate issuer with P80.3 billion in outstanding bonds, followed by Metropolitan Bank & Trust Co., (P55.4 billion); SM Prime Holdings, Inc. ( P55 billion); SM Investments Corp. (P47.3 billion); and Ayala Corp. (P40 billion).

The ADB report also showed that by country, the People’s Republic of China continued to lead the emerging East Asian bond market in terms of volume with $7.129 trillion at end-December 2016, followed by the Republic of Korea ($1.714 trillion).

The six Southeast Asian markets • Hong Kong, China, Malaysia, the Philippines, Singapore, Thailand and Vietnam — recorded total bond issuances of $ 6.572 trillion as of December 2016. The Philippines had the second smallest bond market in the region, beating only Vietnam’s $44 billion.

ADB added that bond yields in most emerging East Asian markets dropped last year amid “improving investor sentiments resulting from strengthened economic conditions across the region.” —