THE growith of the market for peso bonds slowed in the fourth quarter to 5.3% against 8.8% a quarter earlier, as the government eased off on borrowing while corporate activity in the market declined, the Asian Development Bank (ADB) said.

According to the March issue of the ADB’s Asia Bond Monitor report released Friday, the peso bond market was valued at P8.568 trillion.
On a year-on-year basis, growth in the quarter was 28.9%, against the 21.5% rise in the third quarter.

“The slower growth was driven by a slowdown in the government bond segment combined with a contraction in the corporate bond segment,” the report read.

The bond market consists of 81.2% government securities and 18.8% corporate bonds.

Outstanding government bonds amounted to P6.956 trillion at the end of 2020, up 7% from the end of September and up 35.3% year-on-year. In the three months to September, the quarter-on-quarter growth rate had been 10%.

The government also owes P220 billion to the central bank to help fund its pandemic containment program.

The Bangko Sentral ng Pilipinas (BSP) approved on Dec. 28, 2020 another P540 billion loan to the government, the third time the central bank has made such a loan. The central bank can lend up to P850 billion to the government according to current law.

“Growth in the outstanding stock of government bonds dropped primarily due to a contraction in issuance of treasury and government bonds; the government issued a fairly large amount of Retail Treasury Bonds in Q3 2020,” the ADB said.

Meanwhile, the corporate bond segment declined 1.3% quarter-on-quarter to P1.612 trillion due to debt maturities and lower issuances.

Year-on-year, outstanding corporate securities rose 7.1%, against a year-earlier growth rate of 14.5%.

Banks took up 43.7% of the corporate bonds issued.
“Quarter-on-quarter bond issuance growth was driven solely by central bank bonds, which rose more than 1,000% as the central bank sterilized foreign capital inflows. Q4 2020 bond issuance was still higher compared to pre-pandemic levels due to the need to fund stimulus measures,” the ADB said.

Across emerging East Asia, the Philippine bond market was the third-fastest growing on a quarter-on-quarter basis, after Vietnam’s 8.1% growth and Indonesia’s 10%. — Beatrice M. Laforga

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