(Bloomberg) -- The Philippines is looking to improve liquidity in its domestic government bond market, according to a top official, to make its debt more attractive to global funds.
National Treasurer Sharon Almanza told Bloomberg that authorities were trying to address foreign investors’ concerns. One of them is a lack of liquidity in the market.
“We are building a benchmark to make the securities in the domestic market liquid,” she said in a telephone interview. Investors “want the bonds to be tradable.”
She did not say what other measures might be taken to enhance turnover in the debt market or when any changes would take place.
Joining international financial benchmarks like the JPMorgan Chase & Co.’s emerging markets debt gauge can be a watershed moment for a country by facilitating inflows of overseas funds.
Accession to the US bank’s emerging market bond index might attract between $10 billion and $12 billion, according to an estimate by the Department of Finance cited by the Inquirer in an article published earlier this month.
As it stands, the Philippines has different types of local-currency notes, including a large portion of debt tailored to retail investors, which is often held until maturity. The country was excluded from a JPMorgan index earlier this year due to a lack of liquidity in its global peso notes.
The country also frequently sells US currency bonds. It raised $2.5 billion via such instruments this week.
Prior to joining a gauge, countries are typically placed on a watch list, and are encouraged to make various financial market reforms. India acceded to JPM’s flagship EM bond index in late June, having been under scrutiny for eligibility for three years.
Officials in Manila are also looking to resolve matters of taxation, Almanza said.
The country has a 20% withholding tax on interest income, according to PWC, though treaties with countries like the US and the UK provide for a lower rate.
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