Philippines now a step closer to re-entering JPMorgan’s bond index

The Philippines is now on the positive watchlist for JPMorgan Chase & Co.’s emerging market government bond index, putting it a step closer to re-entering the list that could help bring in more foreign investments.

JPMorgan said in a report on Sept. 12 that Philippine peso-denominated government bonds (RPGB) have been tagged as “Index Watch Positive,” according to statements from the Bangko Sentral ng Pilipinas (BSP) and the Department of Finance (DoF).

This is the final review phase for the bonds’ potential inclusion in the bank’s Government Bond Index for Emerging Markets (GBI-EM) series.

“Inclusion would be expected to attract more foreign investments, increasing liquidity and lowering borrowing costs for the government and eventually the private sector… While the Philippines has been able to raise funds from foreign investors through its dollar-denominated bonds since the early 2000s, inclusion in the GBI-EM series is expected to help the government draw more foreign investors to its larger peso-denominated bond market,” the BSP said.

JPMorgan’s GBI-EM tracks the performance of sovereign and quasi-sovereign bonds issued by emerging market countries. The country’s inclusion will need to be approved by a certain percentage of investors reviewing the index.

The Philippines would have a weight of about 1% of the GBI-EM Global Diversified Index if included, according to JPMorgan.

The Philippines’ global peso notes were removed from the GBI-EM in January last year due to illiquidity. For potential inclusion in the index are RPGBs issued from 2023 with tenors up to 20 years, the DoF said.

“Getting on the positive watchlist is a testament to the work the government and financial market leaders has done especially in the last few years to expand our capital markets, particularly our local bond market. This news serves as further impetus to execute more changes and reforms,” BSP Governor Eli M. Remolona, Jr. said.

“This is a promising development for the Philippines as the potential inclusion of our government bonds into this global index means increased capital inflows and therefore more funds for the government to better serve Filipinos. This is an excellent opportunity for us to promote our capital markets to a wider range of investors,” Finance Secretary Ralph G. Recto said.

National Treasurer Sharon P. Almanza earlier said it could take the Philippines two to three years to re-enter the bond index after getting added to JPMorgan’s watchlist.

The bank said it will conduct its Index Watch assessment within six to nine months and will provide updates in the first quarter of 2026.

The BSP and the DoF said that JPMorgan cited the Philippines’ “proactive market reforms,” including reviving the repo market, launching the Philippine Peso interest rate swap market, and the consolidation of benchmark tenors, in its decision to put the country on its index watchlist.

“JP Morgan also noted positive feedback from GBI-EM investors, particularly on the accessibility of the RPGB market via Brussels-based clearing house Euroclear, as well as improvements in secondary market liquidity through the consolidation of benchmark tenors… Due to reforms, foreign ownership of RPGBs has doubled from 1.8% in 2021 to 5.2% as of June 2025, JPMorgan said,” the BSP said.

Meanwhile, secondary market liquidity and taxation issues were among the key concerns raised by investors, it added. — Bettina Faye V. Roc, Banking Editor