Corporate bonds issuances grew 129% since 2016 —PDEX report

The private sector’s issuance of bonds — debt instruments issued by companies for capital raising — has grown exponentially since 2016 when the Duterte administration took over, a report by the Philippine Dealing and Exchange Corp. (PDEX) showed.

In his report to the Capital Market Development Council (CMDC), PDEX president and COO Antonio Nakpil said corporate bond issuances surged 129% to P1.48 trillion as of end-August 2020 from P645.6 billion in 2016.

The exponential increase indicates an active primary market dominated by financial institutions, according to Nakpil.

From P645.6 billion in 2016, the outstanding amount of bonds listed by the private sector rose to P792.5 billion in 2017, P1.05 trillion in 2018, and P1.32 trillion in 2019, he said.

The financial sector led the corporate bond issuance activities, accounting for 43% of total corporate bonds listed.

This is followed by the property market at 24%, holding firms at 15%, the industrial market at 13%, and consumer staples at 2%.

“We actually hit P1.53 trillion but there were some maturities and the outstanding level as of the end of August was at P1.48 trillion,” Nakpil said.

The CDMC is co-chaired by Finance Secretary Carlos Dominguez III, lawyer Benedicta Du-Baladad of the Financial Executives Institute of the Philippines (FINEX), and Securities and Exchange Commission (SEC) Chairperson Emilio Aquino.

“That is pretty good. So basically from 2016 to 2020 we more than doubled,” Dominguez said.

Nakpil said that in terms of new corporate bond listings, a total of P136.5 billion worth of bonds were issued in 2016, which grew to P207.4 billion in 2017, P256.4 billion in 2018, and reached a record-high P375.6 billion in 2019.

“As of August this year we are at P295 billion so it is still quite positive although for this particular period what is active are the one- to three-year short tenors,” Nakpil said.

Composed of representatives from the public and private sector, the CMDC is a coordinating body tasked to facilitate the development of the Philippine capital market.

Among its members are National Treasurer Rosalia de Leon, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi Fonacier, Insurance Commission (IC) Deputy Commissioner George Ongkeko, BSP Managing Director Lyn Javier, Securities and Exchange Commission (SEC) Commissioner Ephyro Luis Amatong,  Philippine Dealing System Holdings Corp. (PDS) president Ma. Theresa Ravalo, Investment House Association of the Philippines (IHAP) president Robert Lehmann, Philippine Association of Securities Brokers and Dealers, Inc. (PABDI) president Ismael Cruz and Wick Veloso of the Bankers Association of the Philippines (BAP). —KBK, GMA News