Philippines to Align Bond Pricing With Global Standards Ahead of JPMorgan Index Entry

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) and the banking industry are finalizing a regulation to bring the country’s bond pricing practices in line with global standards, addressing banks’ concerns as the Philippines moves closer to inclusion in JPMorgan’s government bond index. A technical working group made up of regulators and market participants is ironing out the final details of the shift to international bond pricing conventions, the BSP told the Inquirer. The discussions include a draft regulatory guidance that the central bank plans to issue. READ: BIZ BUZZ: Price to pay for JPMorgan index inclusion Biz Buzz earlier reported that the pricing changes, targeted for implementation by Sept. 15, would eliminate the price adjustment between gross principal and net principal—a convention that has been in place since the 1990s. Banks have warned that the change could reduce the value of government securities held in their trading books, potentially eroding profits. Retail investors and trust clients could also incur valuation losses. Bankers also worry they could face legal challenges from clients if the revised pricing methodology results in significant losses. To address those concerns, the open market committee of the Bankers Association of the Philippines (BAP) reportedly sought a BSP circular directing banks to adopt the new methodology, according to people familiar with the discussions. A formal regulatory directive will help shield banks from potential lawsuits by making clear that the change was mandated by the central bank. “The technical working group will provide the details when they are finalized,” the BSP said. Peso-denominated government bonds are scheduled to join JPMorgan’s emerging-market government bond index on Jan. 29, 2027. The benchmark is among the most widely tracked by global investors, and inclusion is expected to increase demand for Philippine government securities from funds that track or measure their performance against the index. READ: Government to issue global bonds anew in 2026 JPMorgan said the decision reflected the Philippines’ “proactive market reforms” in recent years, including streamlined tax treaty procedures, the revival of the reverse repurchase or “repo” market and the launch of the peso interest rate swap market. The latter two initiatives were led by the BAP and the BSP. INQ The Philippines’ local-currency bond market grew 2.8 percent from the previous quarter to P14.1 trillion at the end of March, driven by a 3.9 percent increase in outstanding government bonds and a 4.3 percent rise in corporate debt, according to the latest Asia Bond Monitor by Asian Development Bank.