November 28, 2022 | 00:00
MANILA, Philippines — The country’s bond market rose 13.3% in the third quarter from a year ago, driven mainly by government issuance, the Asian Development Bank (ADB) said.
The AfDB’s Asia Bond Monitor report for November showed the Philippine bond market rose to 11.06 trillion pesos in the third quarter from 9.76 trillion pesos in the same period last year.
Compared to 10.68 trillion pesos in the second quarter, the domestic bond market grew by 3.6%.
Government issues amounted to P9.64 trillion in the third quarter, up 15.8% year-on-year and 3.9% quarter-on-quarter.
This was due to the issuance of treasury bills, which increased by 26% year-on-year to P8.67 trillion in the third quarter.
“Treasury bills continued to dominate the government bond segment and posted the strongest growth during the quarter, offsetting the contraction in all three components of the government bond segment,” the AfDB said.
Meanwhile, outstanding corporate bonds fell slightly to 1.43 trillion pesos in the third quarter from 1.44 trillion pesos in the same period a year ago.
On a quarterly basis, corporate bonds edged up from 1.41 trillion pesos in the second quarter.
The banking sector remained the largest issuer of corporate bonds in the third quarter, accounting for a 31.9% share.
Real estate companies ranked second with a 29% share, followed by holding companies with 16.8%.
In emerging East Asia, the AfDB said the local currency bond market reached $22 trillion at the end of September.
He said emerging East Asia saw deteriorating financial conditions and rising bond yields between Aug. 31 and Nov. 4, amid aggressive monetary tightening in advanced economies and by central banks. regions to contain inflation.
“Almost all major emerging central banks in East Asia have continued monetary tightening to combat lingering domestic inflation and the impact of US Federal Reserve tightening,” he said.
In the Philippines, local currency government bond yields increased for all maturities between August 31 and October 14 this year.
“The sharp rise in bond yields across the curve was propelled by the aggressive monetary tightening stance of Bangko Sentral ng Pilipinas (BSP) to mitigate mounting inflationary pressure,” the AfDB said.
He said the BSP has become the most aggressive central bank in the region when it comes to monetary policy tightening, as it has achieved a cumulative rate hike of 300 basis points for this year, bringing the repurchase rate inverted. overnight to a 14-year high. five percent.
Economists said they expected the BSP to raise rates again next month at its last rate-setting meeting for the year.
The ADB said risks to the bond market include high inflation, slower growth in China and economic fallout from Russia’s invasion of Ukraine.