The country’s local currency (LCY) bond market inched up by one percent quarter-on-quarter in the fourth quarter of 2023, driven by the growth in government bonds, according to a report released by the Asian Development Bank (ADB).
The latest Asia Bond Monitor report said treasury and other government bonds outstanding, which accounted for 82.1 percent of the total LCY debt stock at the end of December, grew 2.1 percent on a quarterly basis in the fourth quarter of 2023, up from 0.3 percent increase in the previous quarter.
“Despite a contraction in issuance, government bonds grew due to a low volume of maturities during the quarter,” the report said.
On the other hand, outstanding central bank securities contracted 6.2 percent quarter-on-quarter due to a large volume of maturities in the fourth quarter of 2023 that exceeded total issuance.
The LCY corporate bond stock contracted 2.6 percent on a quarterly basis, falling to P1.5 trillion at the end of December, driven by a large number of bond maturities during the quarter, the report said.
Corporate bonds accounted for 12.6 percent of the total LCY debt stock at the end of December, with the largest share coming from the property sector accounting for 31.6 percent of this total.
The report also said government bond yields in the Philippines rose for nearly all tenors between December 2023 and end-February 2024 as the Bangko Sentral ng Pilipinas held its policy rate near a 17-year high.
Meanwhile, ADB said the sustainable bond market of member economies of the Association of Southeast Asian Nations (ASEAN), the People’s Republic of China (PRC), Japan and the Republic of Korea expanded 29.3 percent last year, outpacing the 21 percent growth of the global and euro-area sustainable bond markets.
Outstanding sustainable bonds in these economies reached $798.7 billion by the end of 2023 and accounted for around 20 percent of global sustainable bonds, the ADB report said.
Sustainable bonds are bond instruments that are used to finance projects and programs with environmental and social benefits.
“ASEAN sustainable bond issuance made up a higher share of local currency financing and long-term financing in 2023, driven by public sector participation,” said ADB chief economist Albert Park.
“The public sector’s participation not only adds to the supply of sustainable bonds, but also serves as a model case for the private sector and helps set a long-term pricing benchmark for these bonds in domestic markets,” he added.
