PHL local currency bond market posts slight dip in Q3 —ADB

The country’s local currency bond market posted a slight drop in the third quarter, albeit still higher than in the same period last year, data released by the Asian Development Bank (ADB) on Wednesday showed.

According to the ADB’s Asia Bond Monitor report, the Philippine local currency bond market had $129.2 billion in bonds outstanding in local currency terms as of end-September.

This is 0.1% lower than the $131 billion in the second quarter, but 15.7% higher than the $107 billion in the same quarter in 2018.

“The shrinking in the overall local currency bond market was due to the 0.7% on-quarter contraction in the government bond market as the stock of Treasury bills declined and as the government reduced its borrowing program,” ADB said in an accompanying statement.

Government bonds grew by 14.4% year-on-year to $101 billion from $85 billion in 2018. This is 0.7% lower than the $103 billion in the second quarter.

Treasury Bills had the highest drop of 15.3% to $11 billion from $13 billion in the second quarter, albeit still up by 25.9% from the $8 billion in 2018.

“The Bureau of Treasury stated that the smaller borrowing program resulted from government underspending in the first half of 2019, given the delay in the passage of the 2019 budget,” the ADB report read.

“The government also had enough of a cash buffer from the large issuances conducted in the first half of 2019,” it added.

In terms of East Asia, local currency bonds reached $15.2 trillion as of end-September, 3.1% higher than in the previous quarter.

“The ongoing trade dispute between the People’s Republic of China (PRC) and the United States and a sharper-than-expected economic slowdown in advanced economies and the PRC continue to pose the biggest downside risks to the region’s financial stability,” said ADB Chief Economist Yasuyuki Sawada.

“However, monetary policy easing in several advanced economies is helping to keep financial conditions stable," he added. —Jon Viktor Cabuenas/VDS, GMA News