PH closer to JPMorgan emerging market bond index inclusion

By Francis Allan L. Angelo

The Philippines is moving closer to being included in JPMorgan’s Government Bond Index for Emerging Markets (GBI-EM), the most-followed benchmark for local-currency sovereign bonds worldwide.

In a Sept. 12, 2025 report, JPMorgan placed Philippine peso-denominated government bonds (RPGBs) on its positive watchlist, which represents the final review phase before potential entry.

If approved, the Philippines would carry about a 1 percent weight in the GBI-EM Global Diversified Index, alongside Saudi Arabia’s sukuk bonds, which were also placed on positive watch.

The GBI-EM covers 19 countries and guides the strategies of global fund managers investing in emerging market sovereign debt.

In a statement, Finance Secretary Ralph G. Recto said the development signals stronger prospects for foreign investor participation in peso-denominated government securities.

“This is a promising development for the Philippines as the potential inclusion of our government bonds into this global index means increased capital inflows and therefore more funds for the government to better serve Filipinos,” Recto said.

“This is an excellent opportunity for us to promote our capital markets to a wider range of investors,” he added.

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. said the move reflects recognition of reforms carried out to expand domestic capital markets.

“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, particularly our local bond market,” Remolona said.

“This news serves as further impetus to execute more changes and reforms,” he added.

JPMorgan cited “proactive market reforms” as key to the decision, including streamlined tax treaty procedures, revival of the repo market, and the launch of the peso interest rate swap market.

The bank also highlighted Euroclear accessibility for RPGBs and enhanced liquidity through the Bureau of the Treasury’s consolidation of benchmark tenors.

This reissuance strategy creates more liquid securities that global investors prefer, strengthening the secondary market.

As a result, foreign ownership of RPGBs has more than doubled from 1.8 percent in 2021 to 5.2 percent as of June 2025, according to JPMorgan.

Still, investors are seeking further gains in secondary market liquidity and the easing of tax hurdles that currently limit large-scale participation.

Inclusion in the index is expected to lower borrowing costs, boost liquidity, create jobs, and expand funding for classrooms, hospitals, and infrastructure.

The Index Watch-Positive review will run for six to nine months, with an update expected in the first quarter of 2026.