Market Summary

Yield Movements

Between 1 June and 30 August, local currency (LCY) government bond yields in the Philippines fell for most tenors driven by the Bangko Sentral ng Pilipinas' monetary policy easing. On 15 August, the Bangko Sentral ng Pilipinas reduced its overnight reverse repurchase rate to 6.25% as inflation is expected to fall within the government's target range of 2.0% - 4.0% for the rest of 2024. Rising expectations of interest rate cuts by the United States Federal Reserve also contributed to the fall in domestic yields.

Local Currency Bond Market Size and Issuance

Growth in the LCY bond market moderated in the second quarter (Q2) of 2024 to a size of PHP12.5 trillion on reduced issuance from both the government and corporate segments. Total corporate debt stock declined 7.7% quarter-on-quarter (q-o-q) at the end of June, while treasury and other government bonds outstanding grew 2.8% q-o-q due to low volume of maturities during the quarter. High interest rate environment drove the total LCY bond issuance to contract 15.7% q-o-q in Q2 2024.

Sustainable Bond Market

The Philippines' sustainable bond market was dominated by sustainability bond instruments denominated in foreign currency. Outstanding sustainable bonds totaled USD9.0 billion at the end of Q2 2024, with the government and corporate segments each comprising a roughly equal share of the market. At the end of June, the size-weighted average tenor in the Philippines' sustainable bond market was 12.7 years.