PHL bond market growth slows in Q2

GROWTH of the Philippine bond market slowed in the second quarter following a decline in corporate issuances during the period, according to the September Asia Bond Monitor issued by the Asian Development Bank (ADB).

Outstanding local currency (LCY) bonds grew 1.9% from a quarter earlier to $214 billion in the three months to June. The growth rate had been 2.2% in the first quarter, the Asia Bond Monitor reported.

Among 10 economies in Asia that posted quarter-on-quarter expansions, Indonesia’s and Singapore’s bond markets posted the strongest growth at 6.1% and 5.5%, respectively. The average for the Emerging East Asia region was 2.3% on outstanding LCY bonds. The Thai, Hong Kong and Vietnam markets contracted by 0.2%, 0.4% and 3.7%, respectively.

Year on year, the Philippine bond market grew 7.1%.

Outstanding government and Treasury bonds grew 2.8% to $178 billion in the second quarter, against the 2.7% expansion in the previous quarter. This accounted for 83.3% of the total debt stock during the period.

Bond maturities fell during the quarter, the ADB said.

Outstanding central bank securities expand 6.8% quarter on quarter to $14 billion, accounting for 6.5% of the total. The segment’s expansion slowed from the 20.2% posted a quarter earlier.

Corporate bonds contracted 7.7% to $22 billion, making up 10.2% of the Philippines’ total LCY debt stock during the period. This followed an 8.2% decline in the previous quarter.

LCY bond issuances in the Philippines contracted 15.7% quarter on quarter but rose 21.3% year on year to $45 billion at the end of June, the ADB said.

“Issuance of Treasury and other government bonds declined 51.7% q-o-q in Q2 2024 mainly due to the exceptionally high issuance volume in the previous quarter, driven by the sale of Retail Treasury bonds (RTBs) in February,” it said.

The government raised P585 billion from an offering of five-year RTBs in February, exceeding the initial P400-billion target.

Meanwhile, issuances of central bank securities grew 10.1% to $32 billion in the second quarter.

On the other hand, corporate bond issuance declined 41.2% in the quarter to $1 billion as companies held off bond issues in anticipation of lower rates in the latter part of the year.

“The largest corporate bond issuances during the quarter came from SM Prime Holdings and Energy Development Corp., which accounted for 58.0% and 23.2%, respectively, of the Q2 2024 corporate issuance total,” the ADB said.

The emerging East Asian bond market grew 15.4% to $2.55 trillion, driven mainly by government bonds.

Year on year, the regional market expanded 9.4%.

“Increased issuance of Treasury bonds in the People’s Republic of China (PRC) helped offset slower growth in the rest of emerging East Asia,” the ADB said.

Outstanding government and Treasury bonds grew 27% to $1.075 trillion in the second quarter, making up 27% of the total debt stock. This represented a pickup from the 1.3% expansion in the previous period.

“The stock of corporate bonds grew 1.5% q-o-q in Q2 2024, up from 1.2% in Q1 2024, due to increased issuance in the People’s Republic of China and most members of the Association of Southeast Asian Nations (ASEAN),” the ADB said. — Aaron Michael C. Sy