The Philippines plans a debt exchange to trim the number of its outstanding securities while seeking to let banks engage in bond repurchases to help revive the market, Treasurer Roberto Tan said.
"The country's strong economic and fiscal fundamentals must be reflected in the secondary debt market, but the volumes have become volatile," Tan said. "We need to address this, push for initiatives to boost trading volumes and improve the yield curve."
The Treasury might offer two tenors of new securities of at least 50 billion pesos (HK$8.7 billion) each in exchange for securities that were illiquid, infrequently traded, expensive and worth retiring, Tan said. The target is to reduce the count of debt securities to below 100 by December.
The average daily trading volume in the Philippine peso bond market fell to a three-year low last year, and returns in the past three months on sovereign peso debt are the least in Southeast Asia.
Tan said a healthy domestic debt market was crucial to a government that had been relying less on overseas borrowing and to fund the nation's companies investing in records amounts.
The ratio of domestic borrowing to total debt may increase to 88 per cent next year and to 89 per cent in 2017 from a planned 86 per cent this year. Gross borrowing is projected to rise to 760.3 billion pesos next year before easing to 688.08 billion pesos, based on Tan's medium-term plan.