The Philippine domestic bond market consists of short- and long-
term bonds, mainly issued by the national government.
The Philippine bond market is dominated mainly by Treasury
notes and bonds. Although the size of the Philippine corporate
bond market is still small relative to government bonds, it has
been growing rapidly over the years.
In the Philippines, corporate bond issuance came from various
sectors, mostly banks, real estate and telecommunication
companies, toll way operators and a beer-based conglomerate.
The growth in the region’s bond market was driven partly by huge
demand from foreign investors looking for more attractive
returns than those available in the United States, Europe and
other developed markets.
Types of Securities
Issued by the National Government through the Bureau of
•Treasury bills (fixed-rate)
•Treasury bonds (fixed-rate coupon-bearing and zeroes)
• Retail treasury bonds (RTBs, fixed-rate coupon-
bearing)Multi-currency retail treasury bonds (MRTBs,
• Dollar-linked peso notes (fixed-rate)
Issued by the National Government through Other Entities
• Debt securities issued by government-owned and -
controlled corporations (GOCCs)
• Debt securities issued by government agencies
TheAsian Development Bank’s (ADB) latest Asian Bond
Monitor report showed that the country’s local currency
bond market expanded by 13.77 percent year on year to
nearly $100 billion in the first quarter of 2013.
Government bonds made up the bulk of the debt issued in
the Philippines during the three-month period.This
amounted to $86 billion, up 12.77 percent year-on-year.
The corporate bond market expanded by 19.8 percent,
making it one of the fastest-growing markets in the region.
The ADB said this was fueled by corporate bond issuances of
BDO Unibank Inc., Eagle Cement Corp. and conglomerate GT
Capital Holdings Inc.
The local corporate bond market’s growth was slightly faster
than the 19.5 percent year-on-year average growth in the
region, amounting to $2.4 trillion at the end of March.
In the meantime, the government bond market grew at a
more modest annual pace of 8.3 percent.
Bonds with maturities of more than 10 years re-emerged in
the market last year after a long hiatus, although they
comprise only a two percent share of the total corporate
bond market. Before 2006, corporate bond issuers rarely
offered bonds with maturities beyond five years and never
more than 10 years.
The top borrowers were San Miguel Brewery, which raised
P45.2 billion; Ayala Corp, P40 billion; BDO Unibank, P38
billion; SM Investments Corp, P36.1 billion; Ayala Land Inc,
P31. 2 billion; Philippine National Bank, P21.9 billion; Manila
Electric Co, P19.4 billion; Philippine Long DistanceTelephone
Co, P17.3 billion; and Maynilad Water Services Inc, P16.6
Other issuers in the first quarter were SM Development
Corp, P16.3 billion; Filinvest Land Inc, P14.5 billion; Rizal
Commercial Banking Corp, P14 billion; Petron Corp, P13.6
billion; JG Summit Holdings Inc, P13.3 billion; and Security
Bank, P13 billion.
The following has contributed to a lack of transparency in the Philippine
corporate bond market:
1. Exemptions from rating and listing requirements.
2.Absence of competitive pricing information using benchmark government debt
3. No readily accessible monitoring and surveillance methods/tools for use by
4.Absence of data consolidation on completed transactions.
5. No access to reliable information on creditworthiness of issuers, except for
sophisticated institutional investors.
Problems besetting institutional investors
Some institutional investors, such as pre-need companies, non-life insurance and
mutual funds, (which, because of their liability structures, represent the bulk of
demand for corporate issues) currently have a poor reputation in the market,
which is hampering their growth. Dealing with the problems of institutional
investors may require a stronger regulatory environment.
No organised trading
The corporate bond market in the Philippines is bilateral and
conducted OTC. Currently, there is no true picture of
secondary market liquidity, and it is not clear whether there
are repo or derivatives markets.The lack of pricing and
distribution information has dampened the demand for
High issuance costs
Because of high issuance costs, only top-tier corporations
can issue bonds. Indeed, most Philippine companies,
including small and medium-sized enterprises, would rather
obtain their funds via bank loans than via the capital market.
Outmoded bankruptcy laws
There are significant gaps between existing bankruptcy laws
and investor protection.The current corporate rehabilitation
law is obsolete, and does not ensure the ability of investors
to immediately recover investments in the event of default.
142 BIS Papers No 26
Need for increased regulatory supervision
There is a need for increased supervision of corporate bond
issuance. Publication of post-trade information and other
market data is required not only to promote trading in the
secondary market, but also to ensure proper market
monitoring and surveillance.
Philippines has long been amongAsia's most aggressive
sovereign borrowers. Now it is about to become one of its
most attractive to foreign investors too.
The economy looks healthy, growing at an annual rate of 6.1
percent in January to June, higher than Malaysia,Vietnam,
South Korea,Thailand and Singapore.
The Government sector and the Corporate sector bonds are
on a rise.