Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. welcomed J.P. Morgan’s decision to place Philippine peso-denominated government bonds on its “Index Watch-Positive” list, calling it proof of the country’s progress in capital market development.

“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,” Remolona said.

The move signals that the Philippines is nearing potential inclusion in J.P. Morgan’s Government Bond Index–Emerging Markets (GBI-EM), a widely tracked benchmark for local-currency sovereign bonds that guides the investment decisions of global fund managers.

Inclusion is expected to attract more foreign investors into peso-denominated bonds, boosting liquidity and lowering borrowing costs for the government and private sector.

Finance Secretary Ralph Recto said the development will allow the Philippines to tap greater capital inflows to fund social and infrastructure needs.

Promising development

“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,” Recto said.

J.P. Morgan attributed its assessment to “proactive market reforms” in recent years, including streamlining of tax treaty procedures, revival of the repurchase (repo) market, and the launch of the peso interest rate swap market. It also cited improvements in secondary market liquidity through the Bureau of the Treasury’s consolidation of benchmark tenors, as well as increased accessibility of peso bonds via Euroclear.

As a result of these reforms, foreign ownership of peso-denominated government securities doubled from 1.8 percent in 2021 to 5.2 percent as of June, the bank noted.

Assessment period

The assessment period is expected to last six to nine months, with updates due in the first quarter of 2026.

If successful, the Philippines would secure about a one percent weight in the GBI-EM Global Diversified Index, joining 19 emerging markets including Brazil, Mexico, and South Africa. Saudi Arabia’s sukuk bonds were also placed on the positive watchlist.