The Gist
News and Features
Global Philippines Fine Living
Insights
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
THE BASICS
Investment Tips Explainers Retirement
Webinars
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
Downloads
grocery-2-aa
Economic Updates
Inflation Update: Prices rise even slower in May 
DOWNLOAD
Buildings in the Makati Central Business District
Economic Updates
Monthly Recap: BSP to outpace the Fed in rate cuts 
DOWNLOAD
economy-ss-9
Economic Updates
Quarterly Economic Growth Release: 5.4% Q12025
DOWNLOAD
View all Reports
Metrobank.com.ph Contact Us
Follow us on our platforms.

How may we help you?

TOP SEARCHES
  • Where to put my investments
  • Reports about the pandemic and economy
  • Metrobank
  • Webinars
  • Economy
TRENDING ARTICLES
  • Investing for Beginners: Following your PATH
  • On government debt thresholds: How much is too much?
  • Philippines Stock Market Outlook for 2022
  • No Relief from Deficit Spending Yet

Login

Access Exclusive Content
Login to Wealth Manager
Visit us at metrobank.com.ph Contact Us
Access Exclusive Content Login to Wealth Manager
Search
The Gist
News and Features
Global Philippines Fine Living
Insights
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
THE BASICS
Investment Tips Explainers Retirement
Webinars
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
Downloads
grocery-2-aa
Economic Updates
Inflation Update: Prices rise even slower in May 
June 5, 2025 DOWNLOAD
Buildings in the Makati Central Business District
Economic Updates
Monthly Recap: BSP to outpace the Fed in rate cuts 
May 29, 2025 DOWNLOAD
economy-ss-9
Economic Updates
Quarterly Economic Growth Release: 5.4% Q12025
May 8, 2025 DOWNLOAD
View all Reports
Uncategorized 3 MIN READ

Ask Your Advisor: Which are better, peso-denominated bonds or asset swaps? 

Bonds and asset swaps are just some of the financial tools you can use to build wealth. Think of your needs and goals when choosing between the two.

March 22, 2024By EA Aguirre
Two persons in suits holding pens in their right hands while talking about some charts.

Our new column, Ask Your Advisor, is all about the most common questions asked by our high-net-worth clients.

You may have the same questions, too. Our goal with this column is to help expand your knowledge and deepen your understanding of financial tools and concepts that will help grow your wealth.

So, let’s dive in. I get asked this question often: Which is better, peso-denominated bonds or asset swaps?

Peso-denominated bonds can refer to government securities or corporate bonds. In this transaction, everything is denominated in pesos.

However, there may be opportunities outside the Philippines that some high-net-worth individuals may pursue. They include bonds denominated in US dollars or some other currency, perhaps Japanese yen or euro, issued by various global institutions and even sovereign governments.

If a client wants to buy a dollar-denominated bond that will mature in five years, he should ideally have some dollars on hand. Most of the time, however, our clients’ funds are in pesos. They may not be in businesses that naturally generate dollars.

Managing forex risks

So, the first step is to buy dollars. Now the bond will pay interest in dollars, too. And after the bond matures in five years, the bond will also pay the principal in dollars. While some clients are OK with holding dollars, some would like to have them in pesos.

Therein lies the risk when you convert back to pesos. The exchange rate is always moving. There are many points of foreign exchange price risk.

The asset swap is meant to mitigate that risk. It is a structure that involves simultaneously buying a foreign currency-denominated bond and entering into a derivative will lock in the exchange rate for all the components of the bond transaction – from buying the bond, collecting interest, and redeeming the principal.

Is an asset swap always better?

An asset swap can be an effective way for clients with only pesos on hand to expand their investment universe and diversify their bond holdings. Of course, it all depends on what the client needs and the careful assessment of prevailing market conditions.

Clients are encouraged to hold the asset swap until maturity as early termination may result in potential mark-to-market losses. On the other hand, an ordinary peso-denominated bond can be traded on the secondary market, provided that there is a ready buyer.

But for clients who specifically want to hold their investments to maturity, we encourage exploring and comparing both peso-denominated bonds and asset swaps.

Since both products have their own separate markets, one may offer potentially higher returns than the other. In Metrobank, we give our clients seamless access to these products.

We hope you learned something new today. It is always advisable to consult your investment advisor when exploring investment options.

In our next release of Ask Your Advisor, we will feature more questions like this.

(Bookmark and visit Metrobank Wealth Insights at www.wealthinsights.ph daily for investment insights and ideas. If you are a Metrobank client, please get in touch with your relationship manager or investment specialist for assistance in accessing exclusive content. Not a client yet? Please sign up here so you can begin your wealth journey with us.)

EARL ANDREW “EA” AGUIRRE is a Market Strategist at Metrobank’s Financial Markets Sector and has 10 years of experience in foreign exchange, fixed income securities, and derivatives sales. He has a Master’s in Business Administration from the Ateneo Graduate School of Business. His interests include regularly traveling to Japan and learning its language and culture.

Read More Articles About:
Worldwide News Philippine News Rates & Bonds Equities Economy Investment Tips Fine Living

You are leaving Metrobank Wealth Insights

Please be aware that the external site policies may differ from our website Terms And Conditions and Privacy Policy. The next site will be opened in a new browser window or tab.

Cancel Proceed
Get in Touch

For inquiries, please call our Metrobank Contact Center at (02) 88-700-700 (domestic toll-free 1-800-1888-5775) or send an e-mail to customercare@metrobank.com.ph

Metrobank is regulated by the Bangko Sentral ng Pilipinas
Website: https://www.bsp.gov.ph

Quick Links
The Gist Webinars Wealth Manager Explainers
Markets
Currencies Rates & Bonds Equities Economy
Wealth
Investment Tips Fine Living Retirement
Portfolio Picks
Bonds Stocks
Others
Contact Us Privacy Statement Terms of Use
© 2025 Metrobank. All rights reserved.

Read this content. Log in or sign up.

​If you are an investor with us, log in first to your Metrobank Wealth Manager account. ​

If you are not yet a client, we can help you by clicking the SIGN UP button. ​

Login Sign Up