PH bond market up 18% in 3Q
MANILA, Nov. 29 (PNA) — The sale of local currency-denominated debt papers issued by companies in the Philippines rose by nearly a third in the third quarter and expects to sustain until next year due to investment opportunities in the infrastructure and energy sectors, the Asian Development Bank (ADB) said.
In its Asia Bond Monitor, the Manila-based lender said the sale of corporate bond rose 28.6 percent to $9 billion in the third quarter from $ 7 billion in the same period last year.
Quarter-on-quarter, the ADB said corporate bond sale rose 12.5 percent.
The ADB added that the strong corporate bond market will continue until next year.
“Market observers are hopeful for a recovery in Philippine peso bond corporate issuance during the rest of 2010 and early 2011, due to investment opportunities in the infrastructure and energy sectors, as well as increasing foreign interest in the Philippines and the higher returns offered by its corporate bonds,” the ADB said.
On the other hand, the government sold $64 billion of debt papers during the quarter from $ 53 billion in the third quarter of last year.
In September, the government sold P44.1 billion or $ 1 billion of 10-year bonds in the first offshore local currency bond issuance from an Asian country.
These bonds were settled in US dollars and are exempt from the Philippines’ 20 percent tax on interest income.
Over a month after the successful issue of the government’s $ 1 billion peso global bond, Petron Corp. raised P20 billion from the issuance of a 7-year peso global bond.
The Petron global peso bond pays a coupon of 7 percent per year, but is subject to a 20 percent withholding tax.
Overall, the country’s bond market rose 18 percent to $ 72 billion in the third quarter from $59 billion in the same period last year.
Iwan Azis, head of ADB’s Office of Regional Economic Integration, which produced the report said companies are taking the opportunity to raise money in Asia’s local currency bond markets because of the growing demand from investors, particularly overseas investors.
“Foreign interest has risen, given Asia’s favorable growth fundamentals, lower interest rates in mature markets, and despite administrative measures in some countries to limit capital inflows,” Azis said.
Local currency government bonds in emerging East Asia totaled $ 3.55 trillion, 14.6 percent higher year-on-year and 1.9 percent higher quarter-on-quarter.
The slower growth came with many countries now paring their fiscal stimulus packages and with some central banks opting to slow sterilizing bond sales.
Emerging East Asia comprises the People’s Republic of China (PRC); Hong Kong, China; Indonesia; Republic of Korea; Malaysia; the Philippines; Singapore; Thailand; and Vietnam.
The ADB said the region’s local currency bond markets amounted to $ 5 trillion, driven by a rapid rise of corporate bond issuance.*PNA
