THE Philippines’ return to a bond index can lead to higher foreign investment flows and a stronger peso, an analyst said.
“This is important because it could bring more foreign money into the Philippines,” Metrobank chief economist Nicholas Antonio Mapa said, explaining that when a country is included in these indexes, investors who keep track of them tend to buy bonds from that country.
For instance, he pointed out, if the Philippines were assigned a 5.0-percent share in the index, investors might allocate 5.0 percent of their funds to the country.
The government is reportedly in discussions with JP Morgan Chase & Co. to place the country’s peso bonds in the bank’s emerging-market debt index.
The Philippines was part of such an index until early 2024 when it pulled out due to rebalancing.
Mapa said that ongoing talks between government officials and the bond index administrator are a positive sign, suggesting the country could not only rejoin but also possibly secure a larger share.
“Given that investment houses that track the index would be required to hold a fixed percentage of Philippine investment products, this could suggest that investor flows would be less volatile and more sticky,” Mapa pointed out.
“These funds will be more likely to stay in place for a longer time,” he added.
With positive factors like steady growth prospects and easing inflation, Mapa stressed the country’s return to a bond index would reinforce its appeal as an investment destination.
However, challenges such as tax issues, market liquidity and benchmark securities could delay the inclusion, he added.
“These challenges aren’t insurmountable, but they take time to address. India’s recent inclusion into a bond index finally occurred after a gestation period of roughly two years, so we do see the Philippines’ inclusion as more of a 2026 story,” Mapa continued.
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