Bond index inclusion to boost foreign fund inflows

THE PHILIPPINES may see an additional P100 billion in foreign inflows once it is included in JPMorgan Chase & Co.’s emerging market government bond index, National Treasurer Sharon P. Almanza said.

Ms. Almanza told reporters on the sidelines of an event on Tuesday that they expect foreign fund inflows to rise by about one percentage point or around P100 billion if the country successfully reenters JPMorgan’s Government Bond Index for Emerging Markets (GBI-EM) series.

The global bank has tagged Philippine peso-denominated government bonds have been tagged as “Index Watch Positive,” which is final review phase for inclusion.

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

Ms. Almanza said they have been seeing increased foreign participation in the government’s bond issuances and the capital markets.

“Actually, despite not being included in the index, we’ve seen an increase. We felt it already back in August, when it went from 5% to 6%,” she said.

She added that the government is working to address the liquidity and taxation issues raised by investors.

“We’re really promoting the implementation of the tax treaty. Some of them already have double taxation agreements with us,” she said, adding that they are also consolidating benchmark tenors and boosting secondary market liquidity through the repurchase and rate swap markets.

Finance Secretary Ralph G. Recto told reporters at the same event that they expect the country’s inclusion in the bond index to help reduce government borrowing costs by bringing rates down.

He added that jumbo global bond issuances are “always an option,” with offerings of US dollar-, euro- and yen-denominated papers “on the table,” depending on market appetite.

The Philippines last issued yen-denominated or Samurai bonds in April 2022, raising ¥70.1 billion.

In January, the government raised $3.29 billion from its sale of US dollar and euro bonds, filling most of its $3.5-billion commercial borrowing requirements for this year. — A.R.A. Inosante