Gov’t takes shot at JP Morgan index comeback

The Philippines is addressing concerns raised by investors—particularly issues on taxation and liquidity—as it eyes a comeback to the emerging markets bond index (EMBI) of investment bank JP Morgan Chase & Co., continuing what could be a long process of rejoining the key debt gauge.

In an interview on the sidelines of the 41st Asean Social Security Association on Monday, National Treasurer Sharon Almanza told reporters the government was preparing for the next review of JP Morgan which, she said, would happen in the first quarter until the middle of the second quarter of 2025.

“Let’s just say that we are trying to address all the issues that the investors raised, which are liquidity and then on the tax,” Almanza said, adding that it was still “difficult” to provide an exact timeline of the Philippines’ return to the bond index.

“We’re still under the radar,” she added.

Finance Secretary Ralph Recto had said the Philippines is working with JP Morgan for the reinclusion of peso-denominated government bonds in the important debt gauge, which is closely monitored by global investors. The country was removed from the index due to declining liquidity.

Rejoining EMBI

Recto had said rejoining the EMBI could make government bonds more visible to mammoth global funds and potentially attract $10 billion to $12 billion in fresh investments.

Analysts had said that joining the debt gauge could also lower borrowing costs for the government. This would ease the debt burden of the state and allow it to plug its budget deficit, all while allocating more funds to productive spending like infrastructure development and social programs for the poor.

But experts believed this planned comeback could take some time as the country would have to clear hurdles like tax issues, market liquidity and benchmark securities. Recall that it took India roughly two years to be included in the index.

That said, the Philippines has already taken steps to qualify for inclusion to the EMBI.