Philippines aligns bond pricing with global convention
The Philippines will adopt an international bond pricing convention on Jan. 4, 2027, covering eligible peso-denominated government and corporate securities as regulators seek to attract more investors and deepen market liquidity.
On Friday, the Bangko Sentral ng Pilipinas (BSP) said the transition covers eligible peso-denominated, coupon-bearing securities.
These include fixed rate treasury notes, retail treasury bonds, other eligible government securities and peso-denominated corporate bonds.
The reform changes how bonds are priced for settlement purposes.
Tax obligations and contractual terms will remain unchanged, with bondholders continuing to receive scheduled interest payments and their principal at maturity.
“By making Philippine bond pricing more familiar to global investors, we hope to encourage more trading, developing a more active secondary market for Philippine bonds,” Securities and Exchange Commission (SEC) Chair Francis Lim said.
A sample computation shared by the BSP illustrates how the change would affect the amount a buyer pays a seller.
For a treasury bond trading at a premium with a P500-million face amount, the example shows a settlement amount of P554.64 million under the current convention, compared with P563.27 million under international pricing.
The difference reflects the removal from the settlement computation of an P8.62-million deduction labeled “price adjustment (tax on premium).”
The sample retains the same gross principal, accrued interest and 20-percent final withholding tax on accrued interest.
The presentation also states that outstanding price adjustments must be closed out.
The example illustrates a change in settlement computation, rather than an increase in the bond’s face amount or promised payments.
Investors holding bonds to maturity will experience no actual impact, regulators said. Most individual holders of Philippine bonds fall under this category.
The initiative is led by the Bureau of the Treasury, BSP, SEC, Insurance Commission and Philippine Dealing and Exchange Corp. (PDEx), alongside industry associations.
Relevant regulations and systems are expected to be ready before the end of 2026.
Financial institutions and other market participants will undertake transition activities from Jan. 1 to Jan. 3.
The convention will be incorporated into PDEx’s revised fixed-income market rules and trading conventions.
Authorities expect broader participation to improve trading, price discovery and bond valuations.
A deeper market could help lower government borrowing costs and, over time, financing costs for businesses and households.
“A more robust bond market complements bank credit and helps make the Philippine financial market and economy more resilient,” BSP Governor Eli Remolona Jr. said.
The move follows J.P. Morgan’s announcement that Philippine peso-denominated government bonds will join its Government Bond Index–Emerging Markets series on Jan. 29, 2027.
