The Philippine Dealing and Exchange Corp. (PDEx) is expecting bond issuances to reach PHP 400 billion next year amid a large amount of maturities that will need to be refinanced.
“[For] 2024, we were budgeting a little higher. We think we might go to another PHP 400 [billion]. Estimating based on if everybody refinances based on what’s maturing, that’s a possibility,” PDEx President and Chief Executive Officer Antonio A. Nakpil said to reporters on Monday.
He added that more corporations will begin issuing more next year as they will have been used to the level of interest rates.
“We expect more people to come back because by that time people will be more used to where the level of interest rates are. It’s not like this is always gonna be the case; and even if it is the case, we’re talking single digits,” he said.
While big firms will continue to lead the debt market next year, PDEx will try to empower smaller issuers to increase the number of bonds being traded, Mr. Nakpil said.
“For us as an infrastructure in a developing market, we should extend the reach of access to the capital markets. So we have an MSME program, but you can’t do that by just the platform, it’s the underwriters that bring in the issuers,” he said.
The banking and property sectors will continue to lead the market next year as bonds have proven to be a reliable source of funding, especially for banks, he added.
“Their reserve requirements favor bond issuances over traditional deposits. Bonds also give the banks the opportunity. They are very strategic in what their investors are looking for but that doesn’t prevent them from going for five- or 10-year funding, which is what most banks do when they go into fixed-income instruments,” he said.
For this year, Mr. Nakpil lowered the target amount to a range of PHP 190 billion to PHP 200 billion from PHP500 billion previously as the market became volatile for longer than expected.
“We’re not gonna hit PHP 500 billion. Given the situation, people thought that the market’s volatility would only last for a short time but the fog has lifted. We’ll be lucky to reach PHP 200 billion. We’ll probably reach around PHP 190 billion,” he said.
Mr. Nakpil added that only a few corporations expected to schedule an issuance before the year ends, such as Union Bank of the Philippines, Inc. and Vista Land & Lifescapes, Inc. — Aaron Michael C. Sy