Finance Secretary Ralph Recto announced on Monday the Philippines has been placed on Index Watch-Positive by JP Morgan, a step closer to joining the bank’s Government Bond Index–Emerging Markets (GBI-EM).
The move could open peso bonds to a wider pool of foreign investors and lower the government’s borrowing costs.
“This is a promising development for the Philippines as the potential inclusion of our government bonds into this global index means increased capital inflows and, therefore, more funds for the government to better serve Filipinos,” Recto said in a statement.
The GBI-EM is JP Morgan’s benchmark index tracking local-currency government bonds across emerging markets.
“This is an excellent opportunity for us to promote our capital markets to a wider range of investors,” Recto said.
Inclusion in the GBI-EM is expected to attract more foreign investment into peso-denominated securities, helping finance classrooms, hospitals, and infrastructure while generating jobs.
The index, launched in 2005, is considered the industry standard for global investors tracking emerging-market bonds.
Recto said the positive assessment follows sustained talks by the Department of Finance (DOF) and Bureau of the Treasury (BTr) with JP Morgan, and reflects fiscal reforms carried out over the past three years.
These include streamlining tax treaty procedures, expanding the repurchase agreement market, launching the peso interest rate swap market, improving accessibility via Euroclear, and consolidating benchmark tenors.
JP Morgan also noted improved secondary-market liquidity and eased tax hurdles that allow investors to replicate the index more efficiently and scale up their positions.
Philippine peso-denominated government bonds issued from 2023 with tenors of up to 20 years are under review. The Index Watch process typically runs six to nine months before a final decision on inclusion is made.
