REAL ESTATE giant Ayala Land, Inc. was the country’s most active issuer of corporate bonds last year in a debt market that saw companies rushing to raise funds ahead of an expected rise in interest rates, according to a report by the Asian Development Bank (ADB) released yesterday.
In its latest Asia Bond Monitor, the ADB said Ayala Land held P49.9 billion worth of debt papers as of December 2013. The property developer snatched the top spot from San Miguel Brewery, Inc. (SMB), which was 2012’s no. 1 corporate issuer.
SMB, with P45.2 billion of corporate bonds issued, placed second in the ADB’s ranking of top 33 issuers for 2013. Rounding out the top five local corporate issuers were Ayala Corp. (P40.0 billion), Manila Electric Co. (P37.9 billion) and SM Investments Corp. (P36.1 billion).
As of end-December, the total outstanding local currency corporate bonds in the Philippines grew 8.7% quarter-on-quarter and 12.4% year-on-year to reach P591.5 billion, the ADB said.
“The market saw a lot of corporate bond issuances in 4Q13, a total of P77.4 billion compared to P19.5 billion, P14.0 billion, and P32.0 billion in the first 3 quarters of the year, respectively,” the report read.
It said that Philippine companies took advantage of relatively low interest rates, in anticipation of higher rates in 2015 due to the Federal Reserve taper.
“Bond yields in the region have risen since the tapering began in December 2013, and could rise further in the months ahead,” the ADB said.
In a press release that accompanied the report, Iwan J. Azis, head of ADB’s Office of Regional Economic Integration, said: “Good economic data so far this year, attractive yields, and a recovery in some currencies mean Asia is still the best place to invest.”
He added, though, that “the threat of contagion is certainly higher than it was.”
The ADB said the “risk of contagion”, or an emerging market backlash from a crisis in one or two economies, is highest for countries with large current account deficits and low foreign exchange reserves, while borrowers with high levels of foreign currency debt are most vulnerable if currencies depreciate.
“LCY [local currency] bonds in emerging East Asia largely held steady in the fourth quarter of 2013 as turmoil dogged other emerging markets, although yields on most government bonds rose in January, most notably in Indonesia and the Philippines,” it said. -- Raymund Luther B. Aquino