By Ditas B Lopez | Updated on Oct 09, 2026 at 07:07 AM
The Philippines will adopt international pricing conventions for peso-denominated bonds effective next year, a shift it says should attract more participants and help lower its borrowing costs.
Starting Jan. 4, the Southeast Asian nation will change the way it collects taxes on interest income on local-currency government and corporate bonds. Removing the tax on bond premiums or discounts from bond settlement calculations will bring local trading practices in line with international standards, making prices and yields easier to compare across markets.
It comes ahead of the planned move by JPMorgan Chase & Co. to add the nation’s locally denominated debt to its widely followed emerging-market bond index.
Read more: Philippines to Revamp Bond Pricing Ahead of JPM Index Inclusion
The Philippines had about 14.5 trillion pesos ($231 billion) of outstanding local-currency bonds at the end of June, according to the Asian Development Bank’s latest Asia Bond Monitor. Foreigners hold only about 4% of total government securities compared with about 13% in Indonesia and 21% in Malaysia, the ADB said.
Adopting more commonly used market practices will attract additional foreign participants to local bonds and eventually allow the government to borrow more efficiently and at lower rates, according to a joint statement from the central bank, Department of Finance, Bureau of the Treasury, Securities and Exchange Commission, and Insurance Commission.
Due to the shift, however, some investors may see changes in the computation of bonds’ settlement value, the statement said. Holders of premium bonds typically may realize gains while those holding discount bonds may incur losses.
For investors who hold bonds to maturity, there will be no actual impact. Most individual holders of Philippine bonds fall under this category, it added.
Officials are optimistic the reform will boost the country’s debt capital market.
“A deeper and more liquid capital market provides more investment opportunities while giving businesses additional ways to raise funds,” Central Bank Governor Eli Remolona said. “A more robust bond market complements bank credit and helps make the Philippine financial market and economy more resilient.”
All relevant regulations and systems should be in place before end-2026. The transition won’t alter the contractual terms of the bonds, and investors will continue to receive the scheduled interest payments and principal at maturity.
Despite the removal of withholding tax-adjustments, tax obligations will remain the same, the statement said. The Philippines imposes a 20% tax on interest income.
“Aligning with international standards makes it easier for the Philippines to compete for capital in an increasingly integrated global financial system,” Finance Secretary Frederick Go said.