Bond issuances decline by 53 percent in 2023

MANILA, Philippines — Government and corporate bond issues tumbled by more than half last year amid a challenging environment including high interest rates.

Corporate bonds dropped to P106 billion last year compared to P327 billion in 2022, while bank bonds declined to P98 billion from P179 billion a year ago.

Government bonds amounted to P355 billion, lower than the P878 billion issued in 2022, while P88 billion worth of preferred shares were issued in 2023 versus zero in 2022.

Thus, total debt issuances amounted to P647 billion last year, down by 53 percent from P1.4 trillion in 2022.

The data were sourced from the PDS Group culled by First Metro Investment Corp., the investment banking arm of the Metrobank Group.

Last year’s corporate bonds totaling to P106 billion are broken down as follows: SM Prime’s P33.3 billion; Aboitiz Equity Ventures’ P17.45 billion; Ayala Land’s P15 billion; Robinsons Land Corp.’s P15 billion; Filinvest Land’s P11.43 billion; Vista Land’s P6 billion; Citicore’s P4.50 billion and Century Properties’ P3 billion.

Total preferred shares amounting to P88 billion were issued by San Miguel Corp. (P34 billion),  ACEN (P25 billion), Petron Corp. (P14 billion),  Ayala Corp. (P13 billion)  and Megawide  (P1.5 billion).

The first half of 2023 saw the Bangko Sentral ng Pilipinas (BSP) hike interest rates by 25 basis points.

The BSP held rates from April to September last year. Inflation surged to 6.1 percent in September, prompting an off-cycle rate hike of 25 basis points in October.

FMIC head of investment banking Daniel Camacho said for this year, issuers may revisit their fund raising plans as interest rates have eased.

He also sees more energy and transportation infrastructure projects to require financing but noted that bank markets are likely to be a bigger source of financing than capital markets.

FMIC said that in the capital markets, the much-awaited policy pivot along with a slowdown in inflation is poised to entice debt issuers back into the market, capitalizing on reduced borrowing costs.

“On the equity side, the potential easing of bond yields should boost the attractiveness of the stock market, encouraging issuers to consider equity issuances as a valuable alternative for capital raising,” FMIC said.