The Philippine bond market is set to attract more investors this year given its relatively elevated yields and anticipated rate cuts by the US Federal Reserve, Manulife Investment Management said.
“When we look across the region for 2025, from our viewpoint, Philippine yields are elevated, and we expect them to remain relatively elevated for this year, which we think is is quite attractive,” Murray Collis, chief investment officer for Asia Fixed Income at Manulife Investment Management said in a virtual briefing with reporters yesterday.
“For us when we’re investing onshore in the Philippines, we do think that backup in yield over the last few months really creates some value, and we think that that could potentially be an interesting buying opportunity for investors over the course of this year,” Collis added.
The Manulife CIO highlighted the fact the US Fed policy continues to play a central role in influencing regional markets, including the Philippines.
“When we look at the Philippines bond market for 2025, Fed policy really does continue to remain centerstage. And I think, you know, a very fair question about the (Donald) Trump presidency (is) how it may affect economies in the region. These will be, I guess, revealed over time,” Collis said.
“We do expect the market to continue to be volatile in the short term. But that said, we do think that the Fed, as well as the BSP, are intending to cut rates this year, which will help be supportive for the Philippine markets,” he added.
Meanwhile, Collis said the country’s economic growth, taking into consideration the benign inflation, should be in the range of somewhere around 5.5 to 6 percent for 2025.
“In terms of our outlook for inflation, we do expect inflation to remain within the target range of 2 to 4 percent for this year,” Collis said.
As of the end of September 2024, the local currency (LCY) bond market had P13 trillion outstanding bonds, on accelerated growth of 3.8 percent quarter-on-quarter, faster than the 1.9 percent increase in the second quarter, the Asia Bond Monitor of the Asian Development Bank said in its November 2024 issue.
The total corporate debt stock rebounded to expand 3.1 percent quarter-on-quarter in the third quarter of 2024 from the previous quarter’s 7.7 percent q-on-q contraction, as corporates increased their issuance after the BSP’s policy easing in August, the report added.