Philippine bond market shrinks at end-2025

THE PHILIPPINE bond market shrank further in the fourth quarter of 2025 due to reduced issuances by the central bank.

The ADB’s March 2026 Asia Bond Monitor report showed that outstanding Philippine local currency (LCY) bonds shrank by 0.7% to $233 billion (about P13.89 trillion) at end-2025 from $237 billion as of September 2025. This was equivalent to 48.9% of gross domestic product.

This was worse than the 0.1% contraction in the previous quarter.

Year on year, the Philippine bond market expanded by 6%.

The ADB said the quarter-on-quarter (q-o-q) decline was mainly due to the 43.6% contraction in the stock of outstanding central bank securities to $6 billion amid reduced issuances.

“Issuance of central bank securities declined 23.3% q-o-q as the BSP discontinued its 56-day securities since November,” it said.

Meanwhile, outstanding Treasury and other government bonds and corporate bonds increased by 1.2% and 2.1% from the prior quarter to $203 billion and $24 billion, respectively, as issuance volumes exceeded maturities in the period.

The ADB said bond sales declined across all segments in the fourth quarter of 2025, with overall issuances dropping by 39.8% to $30 billion (P1.7 trillion) from P50 billion (P2.9 trillion) in the third quarter. Year on year, this was down by 26.2%.

Issuances of Treasury and other government bonds totaled $9 billion, down by 56.4% from the previous quarter as the government fulfilled most of its annual financing target earlier in the year.

Corporate bond issuances were at $2 billion, down by 51.5%, while central bank securities sold totaled $19 billion.

“The investor profile remained largely stable in 2025. Banks and investment houses remained the largest investor group in the Philippines’ LCY government bond market, with their share rising to 46.4% at the end of December from 45.3% a year earlier,” the ADB said.

“The Philippines’ outstanding sustainable bonds totaled $16 billion at the end of 2025. The total sustainable bond stock increased 41.9% y-o-y (year on year) in 2025, up from $11.3 billion in 2024. This lifted the Philippines’ market share in emerging East Asia’s total sustainable bond market to 2.1% from 1.6%. The expansion was supported by strong investor demand, with total sustainable issuance tallying $5.9 billion, about the same as the previous year’s volume. Both the private (53.3%) and public (46.7%) sectors were active market participants, with over 90% of sustainable bonds from the public sector carrying tenors of more than five years,” it added.

The Philippines was the sole bond market in the Emerging East Asia region to record a quarterly decline at end-2025.

Overall, the region’s LCY bond market grew by 2.1% quarter on quarter to $30.588 trillion last year, slowing from the 3.2% expansion in third quarter of 2025, mainly due to an 11% decline in issuances to $2.9 trillion. Vietnam’s bond market recorded the fastest expansion in the period at 10.5%, followed by Hong Kong at 6.3%, and People’s Republic of China (PRC) at 2.2%.

Meanwhile, in terms of value, the People’s Republic of China had the biggest bond market at end-2025 at $25.002 trillion, followed by Japan’s $9.037 trillion and Korea’s $2.428 trillion.

“Regional financial markets are expected to remain broadly resilient as upside and downside risks appear balanced. On the upside, the region’s generally solid macroeconomic fundamentals and accommodative monetary policies should help cushion external shocks,” the ADB said. “Meanwhile, several downside risks warrant close monitoring… Uncertainty about the US monetary policy path — including the upcoming leadership transition at the Fed, the pace of future interest rate adjustments, and possible quantitative tightening — could contribute to fluctuations in asset prices and global capital flows.”

“Unexpected trade policy and geopolitical developments could also heighten uncertainty. Rising trade fragmentation poses both risks and opportunities for regional financial markets. On the downside, increased tariffs, export controls, and policy uncertainty can weigh on export-oriented sectors and heighten earnings volatility for firms integrated into global value chains, potentially leading to capital flow volatility and weaker investor sentiment.” — AMCS