THE Philippines will be added to J.P. Morgan’s (JPM) emerging market debt index in January next year, a move that could attract fresh foreign investments and deepen the country’s capital markets.
Economic managers on Thursday said that peso-denominated government bonds would be included in the widely tracked benchmark beginning Jan. 29, 2027, alongside Saudi Arabia’s local currency sovereign sukuk.
“This milestone is a strong acknowledgement from the international financial community of the positive developments in the Philippine financial and capital markets, driven by the active pursuit of meaningful reforms alongside robust macroeconomic development,” they said.
“These include wide-ranging initiatives encompassing improvements in the liquidity of government bonds, development of the interest rate swap market, strengthening of the repo market, and clarification and simplified application of tax treaty rules.”
Finance Secretary Frederick Go said the inclusion was a “vote of confidence” in the country’s fiscal discipline and economic management.
Joining the index is expected to broaden the investor base, enhance liquidity in the domestic bond market and potentially lower borrowing costs for the government.
The GBI-EM index is among the most widely followed benchmarks for local currency-denominated emerging market debt, used by global fund managers as a guide for portfolio allocation.
Entry typically compels passive funds and index-tracking investors to allocate capital to a country’s bonds, thereby generating sustained inflows.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. also said the inclusion would help deepen domestic capital markets and improve the transmission of monetary policy.
“As bonds gain more liquidity, this will help the BSP transmit monetary policy, benefiting borrowers and investors across the economy,” he said.
Foreign participation in Philippine government bond offerings is already up and officials said that index inclusion was expected to accelerate this trend. A broader and more diverse investor base is also seen reducing volatility and enhancing market resilience.
“The BTr (Bureau of the Treasury) and BSP will continue to work with other regulators, financial institutions, and fund managers to strengthen alignment of local trading and pricing conventions with global practices,” they said. NIÑA MYKA PAULINE ARCEO