PH bond market growth slowed in Q2
The Philippine bond market grew at a slower pace in the second quarter, even as local yields declined and bucked the ongoing interest rate-hiking cycle of the Bangko Sentral ng Pilipinas (BSP), the Asian Development Bank (ADB) said.
In its latest “Asia Bond Monitor” report, the Manila-based multilateral lender said outstanding local currency bonds, excluding debt securities with maturities of one year or less, rose 2.7 percent from the previous quarter to P13.2 trillion. That was slower than the 3.5-percent growth recorded in the first quarter.
Including short-term debt papers, the peso-denominated bond market expanded 3.3 percent sequentially to P14.5 trillion, slightly faster than the 2.8-percent increase in the previous quarter.
The slower growth came even as local bond yields fell by an average of 21 basis points between June and August, with the declines concentrated in securities with maturities of one year or longer.
The ADB said moderating inflation and weaker economic growth had put downward pressure on yields, offsetting the impact of the BSP’s rate hikes. The central bank has raised its key rate by a total of 0.75 percentage point since April, bringing the policy rate to 5 percent.
“In the Philippines, yields declined despite rate hikes in June and August as lower geopolitical risks eased inflation concerns and weak domestic data tempered expectations of further monetary tightening,” ADB said.
“The Philippines recorded the largest narrowing in risk premia as easing geopolitical tensions and declining inflation supported investor confidence,” it added.
