According to the November Asia Bond Monitor issued by the Asian Development Bank (ADB), bond market expansion picked up in the third quarter, driven by an increase in corporate issuance after the central bank began its easing cycle.
Outstanding local currency (LCY) bonds rose 3.8% to $232 billion in the three months through September, surpassing 1.9% growth a quarter earlier, the Asia Bond Monitor reported.
The Philippines had the second fastest growing bond market among the ten markets in emerging East Asia, lagging only behind Indonesia’s expansion of 4.8%. The average for the emerging East Asia region was 2.7% growth in outstanding LCY bonds. The South Korean bond market was the slowest growing in the third quarter, with yields of 0.01%.
Year-on-year, the Philippine bond market grew by 9.3%.
Philippine corporate bond issuance grew 3.1% quarter-on-quarter to $24 billion. In the second quarter, corporate emissions were down 7.7%.
Corporate issuance accounted for 10.2% of total debt in the third quarter.
“Companies have increased their emissions following the easing of the Bangko Sentral ng Pilipinas (BSP) policy in August,” ADB said.
Meanwhile, Treasury and other government bonds grew 3.6% to $193 billion, accounting for 83% of the total. This was also faster than the 2.8% growth in the previous quarter.
Outstanding central bank bonds also grew 8.5% to $16 billion, accounting for 6.8% of the debt stock, up from 6.8% in the second quarter.
“LCY bond issuance recovered in the third quarter of 2024, driven by reduced interest rates,” the ADB said.
Total LCY bond issuance grew 11% quarter-on-quarter to $52 billion (P2.4 trillion) in the three months through September. This was a reversal from the 15.7% contraction in the previous period.
The ADB said this was driven by increased government borrowing amid a wide range of maturities during the quarter.
Treasury bonds and other government bonds rose 34% to $14 billion during the period. This was a reversal from the 51.7% contraction in the second quarter.
Corporate bond issuance rose 283.9% to $3 billion in the third quarter, driven by falling financing costs. This was also a reversal from the 41.2% contraction in the previous period.
“The largest corporate bond issuances during the quarter came from BDO Unibank, which issued a 1.5-year sustainability bond worth P55.7 billion, and the Bank of the Philippine Islands, which also issued a 1.5-year sustainability bond of 1.5 years worth P33.7 billion. These issuances represented 33.7% and 20.4% of the Philippines’ total corporate issuances in the third quarter of 2024, respectively,” the ADB said.
Meanwhile, central bank bond issuance fell 1.9% to $35 billion, reversing the 10.1% expansion in the second quarter.
The emerging East Asian LCY bond market grew 2.7% to $26.75 trillion in the third quarter, up from 2.3% growth in the previous period.
Year-on-year, the regional market grew by 8.2%.
“Robust government and corporate bond issuance in the People’s Republic of China (PRC), partly due to the central bank’s easing of monetary policy, has supported growth in emerging East Asian LCY bond markets in the third quarter of 2024 supported,” the ADB said.
LCY Treasuries rose 3.7% to $16.87 trillion, largely driven by China, despite slowing issuance in several markets.
The region’s government bond growth in the third quarter exceeded the 2.8% growth in the second quarter.
Meanwhile, the stock of LCY corporate bonds grew 0.8% to $9.2 trillion, helped by issuance from China. This exceeded the 0.6% growth from the previous period.
“Financial companies in China continued to raise funds to meet regulatory capital requirements, while the easing of monetary policy by the People’s Bank of China (PBoC) helped facilitate increased issuance of non-financial corporate bonds,” the ADB said. — Aaron Michael C. Sy