Market Summary

Yield Movements

The local currency (LCY) government bond yield curve in the Philippines shifted upward from 2 February to 29 May, with yields rising 120 basis points on average across all maturities. The rise in yields followed the Bangko Sentral ng Pilipinas' 25-basis-point policy rate hike on 23 April over heightened inflationary pressures stemming from the Middle East conflict. Sentiment was also weighed down by domestic fiscal concerns and sovereign outlook downgrades by S&P Global Ratings and Fitch Ratings in April.

Local Currency Bond Market Size and Issuance

At the end of March, the Philippines' LCY bond market reached PHP14.1 trillion on 2.8% quarter-on-quarter (q-o-q) growth. The increase came from gains in both government and corporate debt stock. Meanwhile, issuance climbed 32.6% q-o-q, driven by front-loaded government borrowing, new 10-year benchmark bond issuance, and higher corporate debt sales for refinancing needs.

Sustainable Bond Market

The sustainable bond market in the Philippines rose to USD17.9 billion at the end of March, exhibiting an 11.7% q-o-q increase. Sustainable bond issuance rose more than fivefold to USD3.4 billion in the first quarter, led mainly by the private sector. A larger share of public sector bonds had maturities above 5 years, bringing the market's size-weighted average tenor to 9.6 years.