Finance Secretary Ralph G. Recto announced that the Philippines has been placed on Index Watch-Positive by leading investment bank J.P. Morgan, marking the nearing of its inclusion into the bank’s index, which will significantly increase government bonds’ exposure to foreign investors and boost economic growth.
“This is a promising development for the Philippines as the potential inclusion of our government bonds into this global index means increased capital inflows and therefore more funds for the government to better serve Filipinos. This is an excellent opportunity for us to promote our capital markets to a wider range of investors,” he said.
Inclusion in the index is expected to attract more foreign investments into peso-denominated government bonds, which will help lower borrowing costs, generate more jobs, and channel greater resources into classrooms, hospitals, and infrastructure that uplift Filipino families.
JP Morgan is a leader in investment and commercial banking, financial transaction processing, and asset management.
Launched in June 2005, the Government Bond Index–Emerging Market (GBI-EM) series is the first comprehensive global emerging markets index of local government bond debt.
The index serves as the industry standard for most investors looking to track performance in local emerging markets.
After continuous discussions with JP Morgan led by the Department of Finance (DOF) and the Bureau of the Treasury (BTr), the Philippines was placed on Index Watch-Positive as a precursor for inclusion into the JP Morgan GBI-EM index series.
This marks the final review phase for the Philippine Peso-denominated Government bonds (RPGB).
For potential inclusion in the index are RPGBs issued from 2023 with tenors up to 20 years.
The positive assessment was attributed to the country’s swift and proactive passage of fiscal reforms over the last three years.
This includes the Marcos, Jr. administration’s efforts to streamline tax treaty procedures, expand the repurchase agreement market, launch the Philippine peso interest rate swap market, increase accessibility via Euroclear, and consolidate benchmark tenors.
JP Morgan also cited some enhancements made by the Philippine government that garnered approval from investors, such as secondary market liquidity and easing of tax hurdles to facilitate scalable index replication and increase foreign portfolio investments.
The Index Watch Assessment is expected to run for six to nine months.
