PDEX expects robust bond trade in ’14

MANILA, Philippines—The Philippine Dealing and Exchange Corp. upgraded its full-year fundraising projections for the bond market, saying listings could rise by more than 10 percent in 2014, against earlier expectations of flat growth.

PDEX president and chief operating officer Cesar Crisol told reporters last week that a 500-percent surge in bond listings was recorded in the first quarter of 2014, compared with the same period last year, as five issuers raised P66.8 billion.

PDEX, which operates the country’s bond and currency trading platform, also announced that eight issuers raised P83.5 billion in 2013.

“Based on the feedback coming from underwriters, there are more [corporations] wanting to tap the capital markets to finance their long-term projects,” Crisol said as he expected 10-percent growth in trade for the full year.

“Right now, corporate bond issuers are trying to take advantage of the liquidity in the market, and they are trying to tap it … before interest rates go up, because of the tapering in the US as well as projected increase in the reserve requirement,” he explained.

Crisol was referring to a decision by the Bangko Sentral ng Pilipinas to increase banks’ reserve requirement by 1 percent starting April 4 to guard against “risks to financial stability,” even as it kept key policy rates steady.

Crisol earlier noted that several firms were keen on selling bonds to finance their foray into infrastructure. As noted, five companies listed bonds in the first quarter of 2014. These were Philippine Long Distance Telephone Co. (P15 billion), Filinvest Development Corp. (P8.8 billion), JG Summit Holdings (P30 billion), ABS-CBN Corp. (P6 billion) and Manila North Tollways Corp. (P7 billion).

On April 2, San Miguel Brewery Inc. listed P15 billion in bonds.

“It’s good that companies are able to finance long-term projects with long-term money,” Crisol said.

In 2013, bond issuers were Manila Electric Co., Aboitiz Equity Ventures, Rockwell Land Corp., Filinvest Land Inc., Ayala Land Inc., Globe Telecom, Energy Development Corp. and GT Capital Holdings, data from PDEX showed.