THE PHILIPPINE bond market posted the fastest growth in the emerging East Asia region in the first quarter, rebounding from the contraction seen in the prior quarter, amid a surge in issuances as the government front-loaded its borrowings, the Asian Development Bank (ADB) said in a report.
The ADB’s June 2025 Asia Bond Monitor report showed that outstanding local currency (LCY) bonds increased by 4.1% to $235 billion (P13.5 trillion) at end-March, rebounding from the 0.6% contraction recorded the quarter prior.
This was the fastest quarter-on-quarter (q-o-q) expansion seen in the emerging East Asia region, the ADB’s report showed. This was also quicker than the regional average of 2.7%.
However, the Philippine LCY bond market was the second smallest in the region in terms of size, beating only Vietnam’s $126 billion.
Year on year, the Philippines’ outstanding LCY bonds grew by 9.4%.
LCY bond issuance also rebounded in the first quarter, posting a 13.7% q-o-q growth to $47 billion (P2.7 trillion) from the 19.2% contraction in the fourth quarter, “fueled by increased issuance in both the government and corporate sectors,” the ADB said.
Year on year, however, issuances contracted by 14%.
“Growth in the LCY bond market rebounded in the first quarter of 2025, supported by robust expansions of government bonds and central bank securities,” it said.
Outstanding Treasury and other government bonds rose by 4.1% quarter on quarter to $196 billion at end-March amid increased government borrowing.
This came as government bond issuances surged by 98.8% to $15 billion “as the government front-loaded its borrowing for the year,” the ADB said.
In January, the National Government (NG) raised $3.29 billion from its sale of US dollar and euro bonds, its first global bond offer for the year.
The NG’s commercial borrowing program is pegged at $3.5 billion this year. National Treasurer Sharon P. Almanza earlier said that the government is unlikely to issue another global bond this year as it has almost completed its program for foreign borrowings.
The government is also not looking at any more large offerings like a Sukuk or a retail Treasury bond issuance, she added.
Meanwhile, the stock of central bank securities also expanded by 15.3% quarter on quarter to $16 billion, which the ADB noted was the fastest growth among all bond types and was also a reversal of the the 11.7% q-o-q contraction seen in the fourth quarter.
This came even as issuances declined by 5.4% quarter on quarter to $31 billion.
“Conversely, despite an increase in issuance, the corporate debt stock contracted 2.8% q-o-q in Q1 2025 due to a high volume of maturities,” the ADB said.
Outstanding corporate debt stood at $23 billion at end-March, while issuances jumped by 20.6% quarter on quarter to $1 billion in the first quarter “as corporate issuers sought funds to refinance their maturing debt,” the multilateral lender said. “SM Prime Holdings, Inc. was the largest corporate bond issuer during the quarter, with total debt sale of P25 billion, or 34.2% of the corporate issuance total.”
“The investor structure of the Philippines’ LCY government bond market remained dominated by two investor groups. These two dominant groups — banks and investment houses, and contractual savings institutions and tax-exempt institutions — collectively held about 75% of the LCY government debt stock at the end of March,” the ADB said.
Meanwhile, it noted that the Philippines’ sustainable bond market is among the smallest in emerging East Asia, making up just 2% of the region’s total.
“Sustainability instruments continued to dominate the Philippines’ sustainable bond market in Q1 2025. Sustainability bonds accounted for 86.5% of the market’s total sustainable debt stock in Q1 2025, followed by green bonds and sustainability-linked bonds with market shares of 11.7% and 1.8%, respectively.”
Meanwhile, the report showed that the emerging East Asian LCY bond market grew by 2.7% quarter on quarter at end-March, easing from the 3.1% expansion in the fourth quarter due to “elevated global uncertainty,” the ADB said. All bond markets posted q-o-q expansions in the first quarter.
In terms of size, the People’s Republic of China had the largest LCY bond market at $22.012 trillion.
“The total bond stock of members of the Association of Southeast Asian Nations (ASEAN) expanded 2.2% q-o-q to $2.5 trillion and accounted for 9.1% of the emerging East Asian total at the end of March. Growth in ASEAN LCY bond markets in Q1 2025 was supported by robust issuance of sovereign bonds as most governments front-loaded their annual borrowing,” the ADB added.
Still, financial conditions in emerging East Asia remained “resilient” despite heightened uncertainty, as trade tensions due to the Trump administration’s changing trade policies raised concerns of a global economic slowdown, causing risk aversion among investors, it said.
“[Any] further uncertainty in trade policies could erode investment sentiment and weigh down financial conditions, curtailing investments globally and regionally. Such uncertainty may prolong elevated borrowing costs, heighten market volatility, intensify supply chain disruptions, and slow economic growth. Uncertain trade policies can also raise concerns that the global economy is becoming more divided, thus harming international cooperation, disrupting cross-border capital flows, and weakening the global financial safety net. These developments could significantly heighten systemic financial vulnerabilities and reduce the resilience of the global financial system,” the ADB said. — BVR
Philippine bond market posts fastest growth in emerging East Asia in Q1
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