By PNA and U.S. News Agency / Asian

The sale of local currency-denominated bonds in the Philippines expanded by double digits in the first half of the year, boosted by treasury and corporate issuances, according to the Asian Development Bank (ADB).

In its Asia Bond Monitor, the ADB said the Philippines’ bond market grew by 12.4 percent to US$ 87 billion in the first six months from a year ago.

Treasury bonds grew 19 percent year-on-year in the second quarter of the year and corporate bonds grew 18.7 percent.

“Increased government expenditure encouraged private companies to expand their businesses and raise additional capital in private markets,” the ADB said.

The lender said a total of P93.5 billion of new local currency (LCY) corporate bonds were printed during the first half of 2012.

Of this total, roughly P74 billion worth were issued in the second quarter, resulting in an 11.5 percent quarter-on-quarter jump in corporate bond issuance.

San Miguel Brewery sold a total of P20 billion of notes with maturities of 5, 7, and 10 years. Ayala Land sold a total of P15 billion in retail bonds carrying 7- and 10-year maturities.

While Ayala Corp. and its telecom subsidiary – Globe Telecom Inc. – floated P10 billion of notes each.

Other issuers during the period included Filinvest Land, Philippine National Bank (PNB), and Rizal Commercial Banking Corp. (RCBC).

“Our local currency bond markets are emerging as a safe haven in the midst of the crisis, but we should not be complacent,” Iwan J. Azis, head of ADB’s Office of Regional Economic Integration, which produced the Asia Bond Monitor report, said in a statement.

“Volatile markets can deter long-term investment and hurt the economy by making it costlier for governments and companies to raise funds.

Moreover, uncertain market reaction to policy action is undermining the predictability and thus the effectiveness of conventional policy-making,” Azis said.

The ADB said despite the uncertainty and volatility in global financial markets, the bond markets in the region continued to expand, with US$ 5.9 trillion in paper outstanding at the end of June, 1.9 percent more than at the end of March and 8.6 percent more than at the end of June last year.