Corporate bonds more than doubled since 2016

BONDS issued by private companies jumped 126% to P1.48 trillion as of August from its level in 2016 according to the Philippine Dealing & Exchange Corp. (PDEx), indicating that the capital market has posted a steady growth, led by the financial sector.

In a press statement issued by the Finance department on Wednesday, PDEx President and Chief Executive Officer Antonino A. Nakpil said the increase represented an “active primary market” as the outstanding corporate bonds listed had steadily expanded from P645.6 billion in 2016, to P792.5 billion in 2017, P1.05 trillion in 2018, and P1.32 trillion in 2019.

“The primary market has been very active. We actually hit P1.53 trillion, but there were some maturities and the outstanding level as of the end of August was at P1.48 trillion,” Mr. Nakpil was quoted as saying in his report to the Capital Market Development Council (CMDC).

Since 2018, the financial sector has led the market which now accounts for 43% of the total, followed by the property sector with a 24% share, holding firms (15%), the industrial companies (13%) and consumer staples (2%).

Meanwhile, new corporate bond listings hit a record of P375.6 billion last year, up 46.5% from P256.4 billion in 2018. The amount of new bond listings have also steadily risen from P207.4 billion in 2017 and P136.5 billion in 2016.

“As of August this year, we are at P295 billion, so it is still quite positive. Although for this particular period, what is active are the one- to three-year short tenors,” Mr. Nakpil said.

The CMDC, a public- private initiative that recommends reforms aiming to develop the local capital market, is co-chaired by Finance Secretary Carlos G. Dominguez III, Benedicta DuBaladad, former president of the Financial Executives Institute of the Philippines, and Securities and Exchange Commission Chairperson Emilio B. Aquino.

It also has members from top officials at the Bureau of the Treasury, Bangko Sentral ng Pilipinas, Insurance Commission, Philippine Dealing System Holdings Corp., Investment House Association of the Philippines, Philippine Association of Securities Brokers and Dealers, Inc., and Bankers Association of the Philippines.

The CMDC in August started studying the proposal to raise the funding requirement of retirement plans for private sector workers by requiring companies to make partial or full funding.

The move is aimed to address the “insufficient” retirement plans received by private sector employees and contribute to the development of the local capital market, at the same time. —