Peso-denominated bond issuances in the country accelerated in the third quarter of the year, hitting ₱2.9 trillion as the Bangko Sentral ng Pilipinas (BSP) continued to cut key borrowing costs.

The increase from roughly ₱2.7 trillion in the second quarter marked a 7.3 percent expansion in local currency (LCY) debt papers, fueled by a “favorable interest rate environment,” the Asian Development Bank (ADB) said in its latest Asian Bond Monitor.

The multilateral lender, based in Manila, reported that government bonds accounted for ₱1.28 trillion of the total peso-denominated debt during the quarter. Government bond sales rose 15.2 percent quarter-on-quarter, a slower pace than the 32 percent growth recorded in the previous quarter, as the government reduced Treasury bond (T-bond) issuance to manage long-term debt. The government simultaneously boosted Retail Treasury Bond (RTB) sales, reaching ₱507.2 billion in August.

Meanwhile, central bank bonds made up ₱1.39 trillion and corporate bonds contributed ₱213.3 billion. The ADB noted that the overall expansion was largely driven by the corporate bond segment, where issuance increased almost fourfold from the previous quarter as companies took advantage of cheaper financing.

Banks dominated corporate bond issuance, accounting for over 60 percent of the total activity in the third quarter of 2025.

“Philippine LCY government bond yields fell for most maturities between Sept. 1 and Oct. 31 as the central bank maintained its dovish policy stance,” the ADB said, noting the BSP’s shift toward easing amid economic weakness.

The BSP, which has reduced its key rate by a cumulative 1.75 percentage points (ppt) since the easing cycle began in August last year, has signaled that further reductions are “possible.”

The peso-denominated government bonds are currently on the positive watchlist of JP Morgan Chase & Co., which could lead to their inclusion in the bank's Government Bond Index for Emerging Markets (GBI-EM).

“Inclusion is expected to broaden foreign investor participation in the economy’s local currency bond market, which in turn could enhance market liquidity, reduce government borrowing costs, and unlock additional funding sources for public services and infrastructure,” the ADB said.

Results of the six-to-nine-month review are expected to be released in early 2026.