The short-end of the government yield curve was at its lowest level since June 2008.  Meanwhile, 7- and 10-year bond yields climbed from end-2008 levels and almost reached the levels prevailang at end-September 2008.  The long-end of the curve has risen less than the belly and short-end, mailny due to the fact that long-dated bonds are a small segment of the total government bond market and are thinly traded.

The amount of outstanding government bonds as of June 2009 fell by 0.2% quarter-on-quarter (q-o-q) to PHP2.456 trillion from PHP2.460 trillion in March.  Meanwhile, corporate bonds stood at PHP297 billion, growing 25.6% q-o-q and 3.6% month-on-month (m-o-m).

Government bond turnover in 2Q09 fell by 19% to 0.11 from the previous quarter.  Philippine government bonds have become less liquid as most investors have become more risk averse due to the uncertain economic environment.

The Philippines Stock Exchange (PSE) is considering setting up an index of shari’a-compliant stocks to compete with countries such as Malaysia in capturing a slice of the Islamic investment market. Meanwhile, Bangko Sentral ng Pilipinas agreed to extend the suspension of the mark-to-market rule on the asset cover for foreign currency deposit units (FCDUs) for another 6 months until September 2009.