Firms’ bond issuances seen steady this year

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THE BOND MARKET will continue to see an array of issuances this year on the back of strong economic growth prospects, according to a bank executive.

ING Bank NV-Manila Country Head and Managing Director Hans B. Sicat said the bond market will continue the streak it saw in 2019 as issuances will “still be healthy.”

“Last year of course was a record year for corporate and financial institutions raising money. You probably have a very similar rate of issuance given the fact that there’s gonna be a lot of growth in the economy and corporates want to participate in that kind of growth right,” he said in an interview with BusinessWorld on the sidelines of the central bank’s annual reception for the banking community held on Jan. 24.

The economy grew by 5.9% in 2019, short of the government’s minimum target of six percent. However, government officials are bullish the economy will expand to hit the 6.5-7.5% gross domestic product (GDP) growth target for 2020 following the timely passage of this year’s national budget and the administration’s infrastructure push.

Maybank Head of Global Banking in the Philippines Manuel G. Bosano III also sees “opportunity in the market.”

“We are very optimistic for 2020…we’ve seen the local banks raise several funds, RTBs (retail Treasury bonds) coming up… That can only give everyone signal that there is definitely opportunity in the market,” Mr. Bosano told reporters in a briefing last Thursday.

As of mid-December, bond listings reached P363.3 billion, surging by 41.7% from the P256.4-billion level for full-year 2018, according to data from the Philippine Dealing & Exchange Corp. (PDex).

PDEx President and Chief Operating Officer Antonino A. Nakpil said in December that they see listings reaching “the same level, at least P350 billion” in 2020.

Mr. Nakpil said the move of the Bangko Sentral ng Pilipinas (BSP) to ease reserve requirements has been “conducive” in boosting the bond market.

The central bank slashed the reserve requirement rate for local bonds issued by banks and quasi banks by 300 basis points in October 2019 from its then level of six percent.

The BSP said that the move was expected to reduce bond issuers’ intermediation cost that could be passed on to holders of such securities.

Meanwhile, ING’s Mr. Sicat noted there has been a increasing interest from banks going into sustainability bonds, although he noted that the growth this kind of issuances might be “gradual.”

“I guess that will probably be more gradual in terms of growth because not everyone has perhaps the specific use for it and I guess at this stage, you still don’t have a substantial difference in pricing but it’s a continuing access through a wider amount of funds in the market,” he added. — Luz Wendy T. Noble