Bangko Sentral ng Pilipinas (BSP) governor Eli Remolona Jr. is urging smaller companies to tap the country’s corporate bond market, challenging the notion that investors shy away from lower-rated issues.
With the help of the country’s banks and regulators, this move will diversify investment opportunities and strengthen the financial market's depth.
AAA club
At present, the country’s corporate bond market is dominated by 50 of the largest companies with the highest credit scores or AAA ratings.
But Remolona said economies such as Thailand have grown their corporate bond market significantly by tapping issuers with non-AAA ratings.
“The AAA issuer doesn’t really need the bond market if you ask me,” Remolona said. “Maybe some of that investment could go to a lower-rated issuer if that lower-rated issuer existed.”
Banks ready to assist
BDO Capital & Investment Corp. president Eduardo Francisco told InsiderPH they are aligned with the BSP in making fundraising more accessible.
Francisco, also president of the CMDF, said they will work with the SEC to simplify the registration process for smaller firms looking to raise capital.
“We’re looking to encourage good second-tier listings such as small and medium-sized enterprises and even rural banks,” he said.
Big issuers drive growth
The domestic bond exchange, Philippine Dealing & Exchange Corp., aims to grow issuances this year to about P400 billion from P209 billion in 2023, its president Antonino Nakpil said in an interview earlier this year.
He said the listings will be driven by large banks issuing debt for refinancing purposes.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
