Market Summary

Yield Movements

Yields on local currency (LCY) government debt securities in the Philippines declined by an average of 21 basis points between 1 June and 31 August, with the decreases concentrated in tenors of 1 year or longer. Despite a cumulative 50 basis points of policy rate hikes in June and August, easing inflation and softer economic activity placed downward pressure on yields. Consumer price inflation eased on a year-on-year basis to 6.4% in June and 6.2% in July from 6.8% in May, while gross domestic product growth slowed to 2.3% year-on-year in the second quarter (Q2) of 2026 from 2.8% in the first quarter (Q1).

Local Currency Bond Market Size and Issuance

The Philippines' LCY bond market expanded 2.7% quarter-on-quarter (q-o-q) to PHP13.2 trillion at the end of Q2, slower than the 3.5% q-o-q increase in Q1. Government and corporate bonds outstanding rose 2.6% q-o-q and 3.2% q-o-q, respectively, with both segments posting more moderate increases than in Q1. LCY bond issuance fell 45.1% q-o-q to PHP476.2 billion, as government and corporate bond issuance declined 46.1% q-o-q and 41.0% q-o-q, respectively.

Sustainable Bond Market

The Philippines' sustainable bond market increased 4.4% q-o-q to USD18.7 billion at the end of Q2, slower from an 11.7% q-o-q increase in Q1. Sustainability bonds remained the largest segment, representing 84.1% of total sustainable bonds outstanding. The central government segment remained substantially longer-dated than the corporate segment, with size-weighted average tenors of 18.2 years and 3.3 years, respectively.