Philippines Nears Historic Entry into J.P. Morgan's EM Bond Index
Philippines enters final review stage for J.P. Morgan's GBI-EM index inclusion, marking a milestone in the country's financial market development and reform efforts.
Philippine Stock Exchange building with traders monitoring financial markets
Philippines Enters Final Review Stage for Major Investment Index
In a landmark development for the Philippine financial markets, J.P. Morgan has placed Philippine government securities on its positive watchlist for potential inclusion in the Government Bond Index for Emerging Markets (GBI-EM). This final review stage, announced on September 12, marks a crucial step toward the country's integration into the widely tracked index.
This milestone comes as the Marcos administration continues its push for economic reforms, demonstrating the government's commitment to strengthening the nation's financial infrastructure.
Market Reforms Drive International Confidence
The potential inclusion, expected to be decided by the first quarter of 2026, follows significant improvements in the domestic debt market. These reforms include:
- Revival of the repurchase market
- Development of the peso interest rate swap market
- Streamlined tax treaty procedures
- Enhanced access through Euroclear clearing
These developments align with broader government initiatives to enhance financial transparency and oversight, which have been central to the administration's economic agenda.
Impact on Foreign Investment
The reforms have already shown promising results, with foreign ownership of peso government bonds increasing from 1.8% in 2021 to 5.2% as of June 2023. This growth in international participation comes as the Philippines positions itself competitively among ASEAN economies.
"Getting on the positive watchlist is a testament to the work the government and financial market leaders has done especially in the last few years to expand our capital markets," stated BSP Governor Eli Remolona Jr.
Looking Ahead
While significant progress has been made, J.P. Morgan notes that investors are seeking further improvements in secondary market liquidity and tax procedures. The potential inclusion would see peso bonds accounting for approximately one percent of the GBI-EM Global Diversified Index.
Manny Pacquiao
Independent Filipino journalist covering democracy, civil rights, and government accountability across Southeast Asia.