The Asia Bond Monitor

I. Introduction

1.1 Background of the study

The Asia Bond Monitor assesses the bond markets of countries such as China, Hong Kong, Indonesia, South Korea, Malaysia, Singapore, Thailand, Vietnam and the Philippines. According to the Asian Development Bank’s (ADB) Asia Bond Monitor, Philippines was among the three countries that showed the fastest quarter-to-quarter pace of growth in the East Asia region during the October-December period of 2011. It is mainly driven by a robust growth in Treasury and corporate issuances. Fixed-rate Treasury notes (FXTNs) increased by 5.3 percent to P2.96 trillion while corporate bonds increased by 6.5 percent to P436 billion that led to having a growth of 3.5 percent to P3.4 trillion in the final three months of 2011. Trading of government securities, particularly the fixed-rate treasury notes has improved quite a lot in the past years. Factors such as the growing capitalization of the banking system and improving regional and domestic economic indicators led to increased trading of these government securities. On the other hand, Corporate and government bond issuers are taking advantage of the massive liquidity in the financial system and the low interest rates in issuing long term bonds. Another report showed that the amount of outstanding government bonds grew by 2.5 percent to 3.9 trillion U.S. dollars while outstanding bonds sold by banks and companies expanded by 17.1 percent to 1.9 trillion U.S. dollars. Although the growth rates are slower than in 2009 and 2010, it is much higher than in the middle of last decade. Countries that have a greater concentration of outstanding bonds in maturities of 10 years or more are less vulnerable to liquidity crisis.

According to Caraballo (2012), the pace of corporate issuance in the Asia region accelerated in the early months of 2012, therefore implying that there will be a swift pace of growth this