PH bond market grows 14%

The Philippine bond market continued to post healthy growth in the first quarter as corporations raised funds through debt for expansion, taking advantage of low interest rates.

The Asian Development Bank’s (ADB) latest Asian Bond Monitor report showed that the country’s local currency bond market expanded by 13.77 percent year on year to nearly $100 billion in the first quarter of 2013.

The country outpaced the 12.1 percent average growth seen across the region, the ADB report said.

The quarterly Asia Bond Monitor assesses the bond markets of the People’s Republic of China; Hong Kong, China; Indonesia; the Republic of Korea; Malaysia; the Philippines; Singapore; Thailand and Viet Nam.

Government bonds made up the bulk of the debt issued in the Philippines during the three-month period. This amounted to $86 billion, up 12.77 percent year-on-year.

The corporate bond market expanded by 19.8 percent, making it one of the fastest-growing markets in the region.

The ADB said this was fueled by corporate bond issuances of BDO Unibank Inc., Eagle Cement Corp. and conglomerate GT Capital Holdings Inc.

The local corporate bond market’s growth was slightly faster than the 19.5 percent year-on-year average growth in the region, amounting to $2.4 trillion at the end of March.

In the meantime, the government bond market grew at a more modest annual pace of 8.3 percent.

The ADB said the growth in the region’s bond market was driven partly by huge demand from foreign investors looking for more attractive returns than those available in the United States, Europe and other developed markets.

“Foreign holdings of most emerging East Asian local currency government bonds continued to rise in the first quarter with yields in the region still more attractive than those in the US and many European markets and on the perception that Asian credit quality is on a par, if not better, compared to advanced economies,” the report read.

This came despite the steady decline in yields of government-issued debt as a result of the benign inflation environment.