MANILA, Philippines—The Philippine capital market must prepare for a “borderless” trade and learn to deal with loan issues that Western banks have left unresolved, according to Philippine Dealing System Holdings Corp. (PDS).
The Philippine banking system is “in the pink of health,” said president and CEO Vicente B. Castillo. “It is well placed to fill in the gaps that stem from European banks’ reduced capability to lend.”
Currently, the best way for the capital markets of different countries to interact is through bonds since agents can transact using standard terms and ratings, Castillo told reporters.
The Bangko Sentral ng Pilipinas and the Securities and Exchange Commission are crafting a blueprint for intra-regional trade, he said. For this, the Philippines needs new talent. It has to have an aligned regulatory framework while it simplifies its taxation regime.
Aside from having the capability to support intraregional trading, the Philippine market is also growing in terms of maturity and capacity to participate in regional trade as local investors grow more appreciative of fixed-income products, Castillo said.
The PDS executive explained that individual and institutional investors now constitute 35 percent of bond activity.
PDS’ target is to improve this to 50 percent “by June or July,” he said.
The Philippine Dealing System Holdings Corp. is the mother company of the Philippine Dealing Exchange Corp. (PDEx), which operates the fixed-income exchange.
Private firms began listing with PDEx in August 2008, with Ayala Corp. and Ayala Land Inc. leading the way with P10 billion worth of corporate notes.
Moving forward, he said, he sees more companies tapping the local debt market and more individual and institutional investors taking up available products.
There had also been talk on the possible union of the Philippine Stock Exchange (PSE) and Philippine Dealing and Exchange Corp. (PDEx).
The Inquirer earlier reported that PSE and PDEx leaders have started discussions on unification—an idea that has been thrown around for a while, and which recently got a push from regulators.
Such a move is expected to give local companies more scale when fundraising, whether through equities or bonds, and make it easier for local investors to deal with a single entity for their securities needs.
This is seen to make the Philippine market more globally competitive, stakeholders said.
In 2011, the PDS group reported P561 million in net revenue and P143 million in net income.