Amount of bonds issued up 34% in first 7 months

By Michelle V. Remo

Philippine Daily Inquirer

2:03 am | Wednesday, October 24th, 2012

The amount of corporate bonds issued and sold in the country rose significantly in the first seven months due to the growth in the liquidity of capital markets.

According to the Bangko Sentral ng Pilipinas, corporate bond issuances from January to July amounted to P212 billion—up by 34 percent from the P158.1 billion reported in the same period last year.

Banks and other financial institutions accounted for 44 percent of the bonds issued and sold during the period.

With the rise in the amount of corporate bonds sold, the amount of funds raised by firms through the sale of equity went up as well.

Data from the BSP showed that in the first seven months, companies raised P91.1 billion worth of equity capital. This was up by 48 percent from the P61.5 billion reported in the same period last year.

BSP Governor Amando Tetangco Jr. said that the rise in funds raised through the sale of bonds and equities showed that companies in need of capital are turning to alternative sources besides banks, which used to be the sole provider of funds for enterprises.

“These numbers show a significant quality improvement in the sources of funding available to both financial and non-financial corporations,” Tetangco told reporters.

But he noted that banks still remain the biggest sources of funds for enterprises.

Also, Tetangco said growing liquidity in the country, as well as continued expansion of bank loans, would be taken into account by the central bank’s Monetary Board in setting monetary policy.

The BSP’s overnight borrowing and lending rates, which influence commercial interest rates, currently stand at historic lows of 3.75 and 5.75 percent, respectively.

The Monetary Board will meet on Thursday to decide whether there is a need to adjust the rates.

Aided by low interest rates, the economy improved this year, growing by 6.1 percent in the first semester—one of the fastest rates recorded among Asian countries during the period.

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Tags: Bonds and t-bills , corporate bonds , Philippines

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