Bond issuances remained a major source of funds for corporate entities in the first 11 months of 2011, but companies sold less fixed-income securities during the period compared with the previous year as they tried to raise more cash via sale of equities.
The increased appetite for equities was brought on by a generally upbeat outlook for the stock market in 2012 compared with the previous year. Most enterprises took the favorable outlook to mean that demand for equities would continue to rise.
A report from the Bangko Sentral ng Pilipinas showed that corporate bonds sold from January to November in 2011 amounted to P173 billion—down by 14 percent from the $201 billion reported in the same period the previous year.
But equities sold through the Philippine Stock Exchange rose by 30 percent over the same period, from P84 billion to P109 billion.
“Corporate issuers continued to tap the equities and bond markets. However, corporate bonds issued were lower compared with those in the previous year,” the BSP said in a report.
For monetary officials, most companies’ decision to raise funds through the capital market is a welcome development because it means that they are seeking to diversify their sources of funds while they hope to reduce their dependence on bank loans, which also grew significantly last year.
Also, industry players expect fund-raising activities in the domestic capital market to remain significant, growing this year on the back of a favorable economic growth outlook and rising liquidity.
Juanchito Dispo of First Metro Investments Corp. earlier said that growth in corporate earnings projected this year would further boost market liquidity, which in turn would fuel appetite for portfolio investments.
Last Friday the Philippine Stock Exchange Index hit a new record high of 4,880.71 points as investors maintained their bullish outlook for 2012.
The favorable outlook for the domestic market is anchored on projections that emerging markets in Asia, including the Philippines, will continue to register faster growth rates this year compared with more advanced economies.