Concerned with safety of the principal while seeking comparatively higher yields, investors lapped up close to P200 billion in corporate bonds during the first seven months of the year, almost 165 per cent bigger than the volume during the same period in 2008.

Data obtained from the Bangko Sentral ng Pilipinas (BSP) showed that total corporate bond issuances in the country reached P198.3 billion in the first seven months.

‘This was a substantial hike from the 40.1 percent growth recorded in the same period last year,’ BSP deputy governor Armando Suratos said.

Corporate bonds, supplied in primary markets, are debt securities, which are issued by public and private corporations and are ideal for investors who want regular cash flows and for people who are starting to build their investment portfolio.

Bonds are generally less jumpy compared with stocks, and provide some measure of stability to an investment portfolio. Since they pay interest as scheduled, an investor gets a steady return for little risk and less bother.

Suratos said that the acceleration of corporate bond issuances during the first seven months of 2009 may be traced to the increase in the issuances of non-financial corporations, which reached a total value of P171.6 billion, up by 570.1 percent.

A large part of the increase may be traced to the issuances of Power Sector Assets and Liabilities Management Corp. (PSALM) and San Miguel Brewery with a combined total value of P130.6 billion, accounting for 76.1 percent of total issuances by non-financial corporations for the period.

Total issuances of financial corporations declined by 45.8 percent to P26.7 billion during the first seven months of 2009, from P49.4 billion in the comparable period of 2008.

Among the big issuers this year were Banco de Oro Unibank, P33 billion; Metrobank with P18.5 billion; Philippine National Bank with P17.75 billion and Manila Electric Co. with P17 billion.

In the early part of the year, Globe Telecom raised P5 billion through the issuance of three and five-year bonds while San Miguel Corp. raised as much as P38 billion from the sale of three, five and 10-year bonds.

SM Investment Corp. also sold five and 10-year bonds in June.

Other contributors were Petron Corp, Rizal Commercial Banking Corp., SM Prime Holdings and Bank of the Philippine Islands.

For the whole year of 2008, BSP data showed that total corporate bond issuances recorded a 50.4 percent increase to P117.4 billion, with financial and noon-financial corporations reflecting growth rates of 49 percent and 53 percent, respectively.

In the latest report, Asian Development Bank (ADB) said the Philippines, together with China, were the most active corporate bond markets in the region.

‘Notably, corporate bonds have become a significant driver of overall market growth as the region recovers from global recession,’ the ADB said.

ADB noted that state-owned enterprises remain the dominant players in many of the region’s local currency corporate bond markets, with banks, infrastructure, and energy companies as primary issuers.

The growth in the issuance of corporate bonds in the Philippines, ADB said, is part of a trend in emerging East Asia where the ‘corporate sector emerged as a more significant driver of local currency bond market growth’ in the first half of 2009.

ADB said that local companies aggressively tapped domestic bond markets to raise new funds and for refinancing despite the economic crisis.

Meanwhile, global credit ratings firm Standard & Poor’s (S&P) said bond issuance in the Philippines has notably grown this year, indicating positive improvement in the domestic economy.

In its Asia-Pacific Economic Markets Outlook Mid-Year Update 2009, S&P said the Philippines is among a handful of Asia Pacific economies propping up their bond flotation.

‘In the first half of 2009, a total of $284 billion was raised in new bonds by companies based in the Asia-Pacific region, a 40 percent increase over the $204 billion recorded in the same period of 2008. China accounted for the lion’s share of the increase, though many other countries also registered increases, notably South Korea, the Philippines, Japan and Vietnam,’ S&P said.