The Philippines’ local currency (LCY) bond market as of June expanded from the previous year and quarter, as the government continues to tap various sources of financing to support its coronavirus disease 2019 (COVID-19) response, according to a report released by the Asian Development Bank (ADB).
According to the ADB’s latest issue of its Asia Bond Monitor report released yesterday, the Philippines’ LCY bond market as of the second quarter grew by 2.5 percent from the previous quarter and 25.1 percent year-on-year to reach P9.35 trillion.
The report showed that the growth was driven by the government segment as the corporate segment contracted both quarter-on-quarter and year-on-year.
“The government continued to ramp up borrowing from the market to fund its widening budget gap in response to COVID-19 and associated economic recovery plans,” the ADB said.
“Preference for safe-haven assets like government securities remained high on the back of the uncertainties brought about by the pandemic and boosted by abundant market liquidity,” it added.
The report said government bonds accounted for 83.8 percent of the total bond market at the end of June, while corporate bonds accounted for 16.2 percent.
Total LCY government bonds outstanding expanded 3.9 percent quarter-on-quarter and 32.7 percent annually to P7.83 trillion as of the second quarter of 2021.
“The increase in market size was mainly driven by treasury bonds and augmented by BSP (Bangko Sentral ng Pilipinas) bills,” the ADB said.
Meanwhile, debt outstanding in the corporate sector declined 3.9 percent on a quarterly basis and 3.6 percent year-on-year to P1.52 trillion as of end-June.
“The decline was underpinned by the maturation of bonds amid low issuance volume during the quarter,” the ADB said. – Angela Celis
