Philippines bond issuances slow down in Q4

MANILA, Philippines — The local currency bond market declined by 0.8 percent quarter-on-quarter in the fourth quarter of 2019 as government issuances fell, according to the latest Asia Bond Monitor of the Asia Development Bank (ADB).

The amount of local currency bonds outstanding in the Philippines fell to P6.646 trillion in the last quarter of 2019 from P6.699 trillion in the third quarter.

Year-on-year, however, a growth of nine percent from total issuances of P6.098 trillion in the fourth quarter of 2018 was seen in the fourth quarter of 2019.

Quarter-on-quarter, outstanding local currency government bonds declined by 2.1 percent to P5.141 trillion in the fourth quarter of 2019 from P5.253 trillion in the previous quarter as Treasury bills and Treasury bonds registered declines of 12.1 percent and 1.3 percent, respectively.

Meanwhile, outstanding local currency corporate bond market expanded by four percent quarter-on-quarter to P1.505 trillion in the fourth quarter from P1.447 trillion in the previous quarter.

Corporate bond issuances in the fourth quarter included those issued by China Bank, Metrobank, BDO Unibank, PSBank, Security Bank, Robinsons Bank, Phoenix Petroleum, Ayala Land, SL Agritech and Alsons Consolidated.

Outstanding bond issuances among the top 30 corporate bond issuers in the country accounted for 88.2 percent of the total ending the fourth quarter of 2019 amounting to P1.327 trillion.

Firms with the most outstanding bonds as of the last quarter of 2019 were: Metrobank, Ayala Land, SM Prime Holdings, BDO Unibank, SMC Global Power, San Miguel, Philippine National Bank, China Bank, Security Bank and Rizal Commercial Banking Corp.

ADB said the prevailing COVID-19 pandemic and deepening global economic uncertainty are weighing heavily on the local currency bond markets in Emerging East Asia which comprises China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Thailand and Vietnam.

“Financial markets in the region are already feeling the brunt of the effects of the COVID-19 pandemic, with foreign investment and sector activities on the downside, coupled with ongoing trade issues,” said ADB chief economist Yasuyuki Sawada.

“Efforts to cushion the negative impacts of the pandemic through stimulus packages and monetary measures to support affected households, businesses, and financial markets should continue.”

Several central banks in Emerging East Asia have also slashed policy rates to mitigate the economic impact of the COVID-19 pandemic.