The Philippines is the fourth fastest growing market in East Asia, according to the latest edition of the Asian Development Bank’s (ADB) Asia Bond Monitor.
The Asia Bond Monitor said the country’s total local currency (LCY) bonds increased 13.7 percent year-on-year.
However, for the first quarter of 2013, LCY bonds outstanding in the Philippines reached P4.1 trillion, or $99 billion, declining by 0.3 percent on quarter-on-quarter basis.
Vietnam retained its position as the most rapidly growing bond market on a year-on-year basis with 53.3 percent, followed by Singapore with 17.3 percent, and Indonesia, 13.9 percent.
The ADB report said Philippine corporate bond issuance in the first quarter of the year grew 21.9 percent quarter-on-quarter and remained unchanged on a year- on-year basis.
“Financial institutions, including banks and investment companies, were the lead issuers of debt in the first quarter of 2013, “ it said.
The entire region’s local currency bond markets expanded 12.1 percent year-on-year to $6.7 trillion at the end of March 2013, driven by double-digit growth in corporate bonds.
The ADB noted that the region’s local currency bond markets now constitute a larger portion of East Asian economies than they did three months or even a year ago, at 54.8 percent of gross domestic product at the end of March, versus 54.6 percent at the end of December 2012 and 52.8 percent at the end of March 2012.
The region’s corporate bond market also expanded 19.5 percent year-on-year and 4.6 percent quarter-on-quarter to $2.4 trillion at the end of March.
Thus, the government bond market grew at a more modest annual pace of 8.3 percent and a quarterly rate of 2.0 percent to $4.3 trillion, it added.
On the other hand, the Asia Bond Monitor emphasized that foreign holdings of most emerging East Asian local currency government bonds continued to rise in the first quarter.
It explained that yields in the region are still more attractive than those in the United States and many European markets because of the perception that Asian credit quality is at par, if not better, than advanced economies.
The ADB report said yields on most government bonds have been trending lower since the end of 2012 in the region as inflation moderates and with policy rates largely unchanged. The only exceptions are Hong Kong, China, Indonesia and Singapore where government bond yields have risen for most maturities since the beginning of 2013 due to inflationary concerns.
The Asia Bond Monitor assesses the bond markets of China, Hong Kong, Indonesia, South Korea, Malaysia, Philippines, Singapore, Thailand, and Vietnam on a quarterly basis.