Peso-denominated bonds issued by the Philippine public and private sectors climbed at the start of the year, as both the government and private corporations increasingly tapped the domestic commercial debt market for their financing requirements.

Data from the Asian Development Bank's (ADB) latest Asia Bond Monitor report for June 2025 showed that the local currency (LCY) bond market grew 4.1 percent quarter-on-quarter to ₱13.5 trillion at end-March 2025, reversing the 0.6-percent decline in the fourth quarter of 2024.

“Growth was steered by a rebound in treasury and other government bonds, which rose 4.1 percent quarter-on-quarter due to increased government borrowing. Meanwhile, central bank securities posted the fastest rate of expansion among all bond types at 15.3 percent quarter-on-quarter, reversing the 11.7-percent quarter-on-quarter contraction in the previous quarter,” noted the ADB report, published last Monday, June 16.

However, the ADB said the stock of corporate bonds shrank by 2.8 percent quarter-on-quarter during the same period as a high volume of securities matured.

The LCY bond market was also boosted by new issuances, which increased by 13.7 percent quarter-on-quarter to ₱2.7 trillion in the first quarter.

“Growth was largely driven by government bond issuance, which surged 98.8 percent quarter-on-quarter as the government front-loaded its borrowing for the year,” the ADB said.

The Bureau of the Treasury (BTr) plans to borrow a gross amount of ₱2.04 trillion through the issuance of T-bills and fixed-rate treasury bonds in 2025. Including foreign borrowings, the government had programmed to raise ₱2.55 trillion in debt this year.

The Philippine government borrows more from the liquid domestic debt market—and in the local currency—mainly through the weekly issuance of treasury bills and bonds, not only to take advantage of creditors here who are awash in cash but also to temper foreign exchange (forex) risks.

Just like the public sector, private firms also ramped up their bond issuances, which jumped 20.6 percent quarter-on-quarter during the first quarter—a reversal of the 63.3-percent drop in the fourth quarter of last year.

“Corporate issuers sought funds to refinance their maturing debt,” the ADB explained.

The ADB noted that Sy family-led SM Prime Holdings Inc. was the biggest corporate bond issuer during the period January to March 2025, as the ₱25 billion in IOUs it raised accounted for over a third of the private sector's total first-quarter fund-raising.

As for bond yields, the ADB cited that these were “mixed” between early March and late May.

“Yields at the short-end (one to three months) and long-end (seven years and longer) of the curve rose an average of 17 basis points (bps), largely tracking the yield movements of United States (US) Treasuries,” it noted.

“In contrast, yields for maturities of six months to five years fell an average of seven bps, driven by the Bangko Sentral ng Pilipinas' (BSP) 25-basis point (bp) rate cut on April 10,” it added.

For longer bond tenors, “the decline in yields was also influenced by the BSP's shift toward a more accommodative monetary policy stance to support growth amid external challenges, fueling market expectations of more rate cuts this year,” it said. The BSP is widely anticipated to again cut the key interest rate by 25 bps—to 5.25 percent from the current 5.5 percent>>>>font-family: Gilroy; display: inline !important;>—when its Monetary Board decides on the policy stance on Thursday, June 19.

While the Philippine bond market continues to grow, the ADB cited that sustainable bond issuances were not catching up as fast.

“The Philippines' sustainable bond market is among the smallest in emerging East Asia, comprising only two percent of the region's total,” the ADB noted.

At the end of the first quarter, total outstanding sustainable bonds reached $13.6-billion worth, up 20.6 percent quarter-on-quarter.

The Philippines' sustainable debt stock is 55-percent comprised of government-issued bonds, including the $1-billion worth, euro-denominated sustainability bonds last February.

Also, more than 70 percent of these sustainable financing instruments are denominated in foreign currencies.