Big corporates are likely to issue bonds before the first half ends despite recently recording lower trading volume, according to First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P).
In the February issue of “Market Call” by FMIC and UA&P, it was noted that there was still an interest among firms to tap the debt market.
“Top corporates may hurry up their bond issuances in [the first half] which would likely contribute to sustain the momentum for the increase in yields,” the report read.
Earlier, the think thanks said the large companies were expected to “aggressively” raise funds via the bond market given the low interest rate environment.
Overnight reverse repurchase facility currently stands at 2 percent after the Bangko Sentral ng Pilipinas (BSP) cut it by a total of 200 basis points to inject more liquidity in the financial system.
In January, corporate bond trading volume fell by 14.1 percent to P5 billion from P5.8 billion in the previous month. It is also lower than last year’s monthly average of P5.6 billion.
SMC Global Power Holding Corp. took the lion’s share—17.7 percent—of trading volume for the period at P882.6 million, the report noted. This was followed by Ayala Land Inc. which registered P474.4 million in volume.
The other top corporates in terms of trading volume in January were SM Prime Holdings, Ayala Corp. and Aboitiz Power Energy.
Last year, the full-year trading volume for corporates improved by 65.9 percent to P75.9 billion, from P67.1 billion in 2019.
Issuances from the local debt capital market, meanwhile, nearly doubled to P1.22 trillion last year from P630 billion in 2019.
The bulk, or 68 percent of the issuances last year, came from government bonds amounting to P830 billion, which is more than threefold compared to P241 billion in 2019.
This was followed by bank issuances of P259 billion—nearly flat from P260 billion in 2019—accounting for 21 percent. Corporate bonds, comprising nearly 9 percent, grew by over 20 percent to P104 billion last year, from P86 billion in 2019. Preferred shares accounted for the remaining P22 billion of issuances.
Offshore issuances, meanwhile, doubled to nearly $9 billion year-on-year in 2020.
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