Corporate bonds sale up 34%

Funds raised through the sale of corporate bonds in the domestic market surged by 34 percent in the first 10 months last year to P237.4 billion from P176.7 billion in the same period in 2011, data from the Bangko Sentral ng Pilipinas showed.

Monetary officials said the increase in the bonds sold by corporations could indicate an increase in the issuers’ business activities.

“Corporations continued to tap the capital markets for financing,” the BSP said in a report.

According to officials, the Philippines currently enjoys a virtuous cycle, under which the country’s improving economic climate drives positive sentiment among portfolio fund owners while higher investments in peso-denominated securities help firms fund more activities that support a faster economic growth.

According to the BSP, the growth in corporate bond issuances came with the rise in sale of equities. This is a welcome development, according to the central bank, which said funds are becoming easier to access.

Citing data from the Philippine Stock Exchange, the BSP said funds raised from sale of publicly listed stocks had hit P192.9 billion in January to October last year, more than double the amount posted in the same period in 2011.

Officials said the sale of more corporate bonds and equities in the country indicated that companies were no longer relying solely on banks for their funding requirements.

They noted, however, that banks continued to service the funding needs of corporate clients. The double-digit rise in loan portfolio of banks in the country reflected the growing resources of banks and their appetite for lending.

Latest lending data from the BSP showed that loans extended by universal and commercial banks hit P3.08 trillion as of the end of October, up by 15.8 percent from P2.79 trillion as of the same period in the previous year.

Officials said credit growth and successful fund-raising activities had helped the Philippine economy post a growth of 6.5 percent in the first three quarters despite weakness of the global economy.

Rising credit and enormous liquidity in the domestic capital market have elicited speculations that the Philippines may be facing risks of overheating within a few years, unless monetary officials do something to temper the trend.