Gov’t courts global funds with bond reform

The Philippines is preparing to compete for a bigger share of global investment capital by adopting international bond pricing standards in January in hopes of attracting more foreign funds into the domestic debt market ahead of its inclusion in J.P. Morgan's emerging-market bond index.

Financial regulators and market participants announced Friday that peso-denominated government bonds will adopt the international pricing convention for settlement purposes beginning 4 January 2027.

The shift is intended to make Philippine bonds easier for international investors to buy and trade, potentially increasing market liquidity and improving the government’s access to cheaper financing.

“This reform is part of our broader effort to modernize the Philippine financial system. Aligning with international standards makes it easier for the Philippines to compete for capital in an increasingly integrated global financial system,” Finance Secretary Frederick Go said on Friday.

The government expects wider investor participation to strengthen demand for its debt securities, which could help bring down borrowing rates and free up more public funds for infrastructure and essential services.

Treasurer of the Philippines Sharon Almanza said the reform would make Philippine bonds more competitive in international financial markets.

“This is an important step in making the Philippine bond market more accessible and attractive to international investors. Broader participation in the government bond market will help lower borrowing costs, enabling the government to finance more productive spending, including public infrastructure and services,” Almanza said.

Apart from government borrowing, a more liquid bond market could eventually translate into lower financing costs for Philippine companies, supporting business expansion, investment and job creation.

BSP Governor Eli Remolona Jr. said a stronger capital market would also reduce businesses’ dependence on traditional bank financing.

“A deeper and more liquid capital market provides more investment opportunities while giving businesses additional ways to raise funds. A more robust bond market complements bank credit and helps make the Philippine financial market and economy more resilient,” Remolona said.

SEC Chairman Francis Lim, on the other hand, said aligning local bond pricing with global practices could encourage more trading and develop a more active secondary market.

“By making Philippine bond pricing more familiar to global investors, we hope to encourage more trading, developing a more active secondary market for Philippine bonds. This will not only benefit the government but, eventually, Philippine businesses that need to raise money and Philippine investors seeking more investment options,” Lim said.

For existing bondholders, the transition may change how settlement values are computed but will not affect tax obligations, scheduled interest payments or principal repayments at maturity.

Investors who hold their bonds until maturity, including most individual holders, will not experience any actual impact.

Insurance Commission Officer-in-Charge Ermar Benitez said the transition could also provide insurers greater flexibility in managing their investment portfolios.

“This transition is expected to enhance liquidity in the bond market, providing IC-regulated entities greater flexibility in managing their investment portfolios while ensuring their continued ability to fulfill their obligations to policyholders and beneficiaries,” Benitez said.

The initiative is being implemented by the Bureau of the Treasury, Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Insurance Commission, Philippine Dealing and Exchange Corp. and financial industry associations.