Outstanding PH bond issues rose 29% in 2012

The total outstanding bonds issued by the Philippine government and private companies hit $100 billion last year, growing by 29 percent from year-ago level of $77 billion.

This was the second fastest expansion in the fixed-income market in East Asia last year, after Vietnam’s 44 percent, according to a recent report of the Asian Development Bank.

In the report, the ADB said favorable economic stories about East Asia, including the Philippines, had driven funds from various parts of the globe to the region.

“Investment is increasingly coming from overseas, with foreign ownership in most emerging East Asia local currency bond markets increasing in the second half of 2012,” ADB said in its quarterly “Asia Bond Monitor” which was released Monday.

ADB senior economist Thiam Hee Ng said the outlook for the region’s bond market remained positive. He said global demand for bonds issued by governments and corporate entities in East Asia would likely remain strong over the short term given the favorable economic outlook on the region.

Ng said the huge funds going to the region posed a liquidity management challenge to policymakers. Given the nature of the funds, monetary authorities should have appropriate policies that will avoid adverse effects of withdrawals, he said.

“Emerging East Asia is much more resilient than it used to be but governments still need to be careful that the surge in capital flows does not fuel excessive rises in asset prices and that they are prepared for the possible reversal of flows when the economies of the US and Europe pick up again,” Ng said.

In terms of volume of outstanding bonds, China’s market remained the biggest with $3.8 trillion, rising year on year by 12 percent. South Korea’s market followed with outstanding volume of $1.47 billion, up by 20 percent. Malaysia’s was the third-biggest with $327 billion, up 24.2 percent.

The entire East Asia registered a combined outstanding volume of bonds of $6.54 trillion in 2012, up by 15.3 percent from a year ago.

In the meantime, Finance Secretary Cesar Purisima said the government wanted the Philippine bond market to continue growing robustly so that more corporations would be able to raise funds for their investment needs.

He said the government wanted to see more of the Top 5,000 corporations in the Philippines tapping the bond market for their financing requirements and relying less on bank loans.

At present, about 87 percent of the outstanding bonds from the Philippines are government securities and only 13 percent are corporate bonds.