Market Summary

Yield Movements

Between 1 December 2024 and 28 February 2025, local currency (LCY) government bond yields in the Philippines rose an average of 13 basis points for maturities of 7 years and longer. The uptick in yields was driven by the Bangko Sentral ng Pilipinas' decision to keep its policy rate unchanged at 5.75% on 13 February due to uncertainties over global economic policies and their potential impact on the domestic economy. The rise in yields was also influenced by expectations of fewer rate cuts this year. In contrast, yields for tenors of 5 years and less fell an average of 17 basis points amid subdued inflation and slow economic growth.

Local Currency Bond Market Size and Issuance

By the end of December, the LCY bond market was dragged down by contractions in the stock of government bonds and central bank securities. Treasury and other government bonds dipped 0.1% quarter-on-quarter (q-o-q) in the fourth quarter (Q4) of 2024, while central bank securities fell 11.7% q-o-q due to reduced issuance during the quarter. Conversely, despite a reduction in issuance, total corporate debt stock grew 2.6% q-o-q in Q4 2024 due to fewer maturities during the quarter. Reduced debt sale from all bond segments led the total LCY bond issuance to contract 19.2% q-o-q to PHP2.4 trillion in Q4 2024.

Sustainable Bond Market

Foreign-currency-denominated sustainability bond instruments remained prevalent in the Philippines' sustainable bond market. Sustainability bonds accounted for over 80.0% of the market's total sustainable debt stock at the end of December, and approximately 71.0% of which were denominated in foreign currencies. Total outstanding sustainable bonds grew 4.0% q-o-q in Q4 2024 to a size of USD11.3 billion.