THE bond market’s expansion picked up in the third quarter, driven by an increase in corporate issuances after the central bank began its easing cycle, according to the November Asia Bond Monitor issued by the Asian Development Bank (ADB).
Outstanding local currency (LCY) bonds grew by 3.8% to $232 billion in the three months to September, topping the 1.9% expansion a quarter earlier, the Asia Bond Monitor reported.
The Philippines had the second fastest growing bond market out of the 10 markets in emerging east Asia, lagging only Indonesia’s 4.8% expansion. The average for the Emerging East Asia region was 2.7% growth in outstanding LCY bonds. The South Korean bond market was the slowest-growing in the third quarter, posting a rate of 0.01%.
Year-on-year, the Philippine bond market expanded 9.3%.
Philippine corporate bond issues grew 3.1% quarter-on-quarter to $24 billion. In the second quarter, corporate issues had contracted 7.7%.
Corporate issues accounted for 10.2% of the overall debt stock in the third quarter.
“Corporates increased their issuance after the Bangko Sentral ng Pilipinas’ (BSP) policy easing move in August,” ADB said.
Meanwhile, Treasury and other government issues grew 3.6% to $193 billion, accounting for 83% of the total. In the previous quarter This was also faster than the 2.8% expansion in the previous quarter.
Outstanding central bank bonds likewise posted growth of 8.5% to $16 billion, accounting for 6.8% of the debt stock, picking up from the 6.8% posted in the second quarter.
“LCY bond issuance rebounded in Q3 2024, propelled by lowered interest rates,” the ADB said.
Total LCY bond issues grew 11% quarter on quarter to $52 billion (P2.4 trillion) in the three months to September. This was a turnaround from the 15.7% contraction in the previous period.
The ADB said this was driven by increased government borrowing amid a large amount of maturities during the quarter.
Treasury and other government bonds increased 34% to $14 billion during the period. This was a reversal from the 51.7% contraction in the second quarter.
Corporate bond issues rose 283.9% to $3 billion in the third quarter amid declining borrowing costs. This was also a turnaround from the 41.2% contraction in the previous period.
“The largest corporate bond issuances during the quarter came from BDO Unibank, which issued a 1.5-year sustainability bond worth P55.7 billion, and Bank of the Philippine Islands, which also issued a 1.5-year sustainability bond worth P33.7 billion. These issuances represented 33.7% and 20.4% of the Philippines’ total corporate issuance in Q3 2024, respectively,” the ADB said.
Meanwhile, central bank bond issues contracted 1.9% to $35 billion, reversing the 10.1% expansion in the second quarter.
The emerging East Asian LCY bond market expanded 2.7% to $26.75 trillion in the third quarter, exceeding 2.3% growth posted in the previous period.
Year-on-year, the regional market grew by 8.2%.
“Robust issuance of government and corporate bonds in the People’s Republic of China (PRC), due in part to monetary policy easing by the central bank, helped prop up emerging East Asian LCY bond market growth in Q3 2024,” the ADB said.
LCY Treasury bonds grew 3.7% to $16.87 trillion, largely due to China despite the issuance slowdown in several markets.
The third quarter growth in the region’s Treasury bonds exceeded the 2.8% expansion in the second quarter.
Meanwhile, the stock of LCY corporate bonds grew 0.8% to $9.2 trillion, also supported by issuances from China. This exceeded the previous period’s 0.6% growth.
“Financial corporations in China continued to raise funds to comply with regulatory capital requirements, while monetary policy easing by the People’s Bank of China (PBoC) helped facilitate increased issuance of nonfinancial corporate bonds,” the ADB said. — Aaron Michael C. Sy
