- The Philippines will change how peso-denominated government and corporate bonds are priced starting January 4, 2027, in a move intended to attract more foreign investors, improve bond trading, and potentially reduce borrowing costs over time.
- Financial regulators and industry groups said the shift will align local bond pricing with international practices, making Philippine debt securities easier for overseas investors to assess and trade.
- The new system will cover eligible peso-denominated bonds that pay interest regularly, including fixed-rate Treasury notes, retail Treasury bonds, other qualifying government securities, and peso-denominated corporate bonds.
The Philippines will change how peso-denominated government and corporate bonds are priced starting January 4, 2027, in a move intended to attract more foreign investors, improve bond trading, and potentially reduce borrowing costs over time.
Financial regulators and industry groups said the shift will align local bond pricing with international practices, making Philippine debt securities easier for overseas investors to assess and trade.
What will change for bond investors?
The new system will cover eligible peso-denominated bonds that pay interest regularly, including fixed-rate Treasury notes, retail Treasury bonds, other qualifying government securities, and peso-denominated corporate bonds.
Under the current system, bond pricing includes an adjustment in the settlement calculation depending on whether a bond trades above or below its face value, known as a premium or discount.
The new convention will remove that adjustment from the calculation, which could change the final settlement amount for certain transactions.
However, the reform will not change the existing 20% final withholding tax on bond interest. The contractual terms of existing bonds will also remain intact, so investors will continue receiving their scheduled interest payments and principal at maturity.
Most individual investors who hold bonds until maturity are expected to see little practical impact. Those who actively trade bonds may see changes in how their holdings are valued, depending on whether they bought them at a premium or discount.
Why the Philippines is changing the rules
The reform is part of efforts to make the local bond market more accessible to international investors. It comes ahead of the scheduled inclusion of Philippine peso-denominated government bonds in J.P. Morgan’s Government Bond Index-Emerging Markets series on January 29, 2027.
The index tracks government debt from emerging markets and is used by international investors to assess investment opportunities. Inclusion could draw more attention and investment to Philippine government bonds.
A larger pool of investors could improve market liquidity, making it easier to buy and sell bonds. Over time, stronger demand may also help the government borrow at lower interest rates, although that outcome is not guaranteed.
What it means for the broader economy
Finance Secretary Frederick Go said adopting international standards would help the Philippines compete for global capital, while Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said a stronger bond market could give businesses more financing options beyond bank loans.
Regulators plan to complete the necessary rules and systems before the end of 2026.
Financial institutions are scheduled to carry out transition activities from January 1 to 3, 2027, ahead of the new system’s implementation.