PDEx expects bond issuances to exceed P400B this year

CORPORATE BOND issuances this year may surpass the Philippine Dealing & Exchange Corp.’s (PDEx) initial target of P400 billion amid expectations of increased offerings by the banking sector, its top official said.

“(The outlook) is a more robust year compared to last year… I think (we will surpass),” PDEx President and Chief Executive Officer Antonino A. Nakpil said on the sidelines of a listing ceremony last week when asked if they can hit the P400-billion target for 2024.

The full-year goal is almost double the P209 billion in issuances seen in 2023, but below the P508 billion raised in 2022.

“We started with [around] P70 billion just within February. We’ll be at P82 billion after this week. It is a very good start for the first quarter,” Mr. Nakpil added.

Big companies and the banking sector will drive the increase in fundraising as they expect interest rates to begin going down later this year, he said.

“There’s a lot of maturities that are going to occur. The banks in particular usually have an incentive to reissue their bonds again. That will be driving the growth. We believe the banks are coming back,” Mr. Nakpil said.

“The corporates who are coming early — and where interest rates haven’t fulfilled the downward trend yet — we’ll probably see. The banks, definitely, have always been very tactical on that. They are very astute when it comes to timing,” he added.

The Bangko Sentral ng Pilipinas (BSP) raised borrowing costs by 450 basis points from May 2022 to October 2023 to bring down elevated inflation, bringing the policy rate to a 16-year high of 6.5%.

BSP Governor Eli M. Remolona, Jr. earlier ruled out a rate cut in the first semester amid risks to the inflation outlook but said the central bank may start considering policy easing in the second half.

PDEx also aims to encourage smaller firms such as micro, small, and medium enterprises (MSMEs) to raise capital from bonds, adding that it is “an extremely large market,” Mr. Nakpil added.

“Focus on the MSMEs is one — focus on getting more people access to capital and going back to the basics of getting capital moving within the economy. That’s why you want the capital market developed so that capital will be accessible to not just family-owned firms or conglomerates, but to new firms,” he said.

“The mission of the capital market infrastructure is to have more issuers have access to capital… Capital should move around to all issuers,” he added. — Revin Mikhael D. Ochave