Firms issued P142B bonds

Bonds issued by corporate entities rose at a double-digit pace as of end-August from a year ago, indicating a pickup in investment activities that could help the economy sustain a decent growth at least over the short term.

Corporate bond issuances amounted to P142 billion in the first eight months of the year, rising nearly 15 percent from P124 billion in the same period last year, the Bangko Sentral ng Pilipinas said in a report.

Central bank officials said the proceeds of bond issuances were used not only to repay debts, but also to fund expansion and investment initiatives.

The rise in corporate bond issuances also meant that the bond market was becoming another major source of financing for enterprises, thus easing the pressure on the banking sector to provide loans to their corporate clients, the BSP said.

Nonetheless, the BSP said bank loans have so far grown also at a double-digit pace this year, hitting almost 20 percent as of end-August, as banks enjoyed rising liquidity that allowed them to lend more.

Meantime, the growth in corporate bond issuance came together with the rise in corporate fund-raising through the sale of stocks on the Philippine Stock Exchange.

Central bank data showed that capital raised through the PSE amounted to P64 billion from January to August, up 19 percent from P54 billion a year ago.

The appetite of banks to lend more, as well as accessibility of financing from the domestic bond and equities markets, made it easier for enterprises to pursue whatever investment plans they had, the BSP said.

Available liquidity in the financial markets, however, has to be combined with efforts to address factors that dampen appetite for investments, economists said.

While investments by local companies have risen significantly this year, economists said the Philippines still lagged behind its neighbors in terms of attracting foreign direct investments due to problems related to infrastructure, bureaucracy and the regulatory environment.

Economists said infrastructure-related problems made the transport of goods in the country costlier. The tedious process in setting up businesses and changing regulations also discouraged foreign companies.

Officials said, however, that the problems were being addressed. In the area of infrastructure, they said the government, through the Public-Private Partnership (PPP) program, was promoting investments among the private sector in key public projects.