Phl bond market grows 8% in Q1

The domestic bond market grew by 7.9 percent in the first quarter as both government and corporate issuances rose on the back of positive investor sentiment prior to the declaration of a pandemic, according to the latest Asian Bond Monitor of the Asian Development Bank (ADB).

The size of the local currency bond market climbed to P7.106 trillion ($140 billion) in the first quarter of 2020 from P6.588 trillion ($125 billion) in the first quarter of 2019.

Quarter-on-quarter, growth was placed at 6.9 percent from outstanding issuances of P6.646 trillion ($131 billion) in the fourth quarter of 2019.

Outstanding government bonds rose by 7.5 percent quarter-on-quarter and 6.2 percent year-on-year to P5.526 trillion ($101 billion).

“The increase in the market size was due to Bureau of Treasury’s enlarged borrowing plan from the local market in the first quarter of 2020, which was upped by the issuance of retail Treasury bonds,” the ADB report said.

Treasury bills and bonds outstanding grew 14.5 percent and 6.8 percent, quarter-onquarter, respectively.

“The increased borrowing was programmed to take advantage of liquidity in the local market as a result of the reserve requirement ratio cuts in the fourth quarter of 2019 by the BSP, as well as of lower interest rates,” ADB said.

ADB said the Bureau of Treasury may adjust its borrowing program upward given the fiscal measures being taken to contain the impact of the pandemic on the economy.

“The government must ensure that it has the resources to prop up the economy and support growth in the near term,” the report said.

The local corporate bond market likewise expanded by five percent quarter-on-quarter and by 14 percent year-on-year to P1.579 trillion ($31 billion) in the first quarter as companies capitalized on positive investor sentiment.