The Philippine Dealing & Exchange Corporation (PDEx) is launching a new derivative product on Monday, Feb. 3, the first purely Philippine peso-denominated interest rate hedge.

On the sidelines of the Financial Executives Institute of the Philippines' inaugural meeting, PDEx President Antonino Nakpil said in an interview that the product will initially be available only to banks, but will later be offered to other clients.

“It's a derivative. It's a new thing. It will be settled in a unique way. We're not creating a futures contract in the traditional sense,” Nakpil explained.

“But it's a forward expression of what has been established as a method of hedging in the futures markets. We're using a forward, OTC (over-the-counter) expression of that. So, it's uniquely Filipino,” he added.

Because it is a first for the market, Nakpil said, “We'll see if it works. We think it will. It's not a futures contract, so there's no leverage. We'll allow only dealers and qualified investors—basically, professionals only.”

He emphasized, “This is not meant for retail investors. Some contracts are not suitable for them, especially those involving leverage. Futures contracts, for example, become complicated once leverage is involved.”

Meanwhile, PDEx is targeting listing P600 billion worth of fixed-income securities this year, 50 percent more than last year's target and 67 percent higher than the P360 billion realized in 2024.

“Our budget is P600 billion, but we may be revising it,” Nakpil said. “We’ll see if it’s reachable, because some of our assumptions from last year, like all the maturing bonds being refinanced, didn't materialize.”

He added that most of the bonds expected this year will be for refinancing. “We’ll see in February. These issuers were planning late last year and they’re coming in this first quarter of 2025. I think we have three or four starting now.”

Nakpil said the issuers are primarily banks and some real estate companies. PDEx will continue advocating for bond issuances by micro, small, and medium enterprises (MSMEs).

“We’ll try a new type of digitalization,” he added. “We’ll try to digitalize the process and aim for smaller amounts, which is what MSMEs need.”

However, Nakpil acknowledged that PDEx may lower its P600 billion target due to geopolitical concerns and interest rate movements.

“Everyone’s looking at geopolitical issues. No one wants to make plans,” he said. “Everyone talks about inflation, and interest rates going here or there.”