The Bankers Association of the Philippines (BAP) is advocating for the adoption of Philippine Bloomberg Valuation (BVAL) benchmarks as the London Interbank Offered Rate (Libor) reaches its phaseout date of June 30, 2023. The BAP supports regulators’ plan to implement a new reference rate within the next six months, but believes that the BVAL benchmarks, overseen by the BAP, are still credible and widely accepted in the Philippine financial and capital markets. The BAP emphasizes the importance of having a yield curve based on actively traded securities, as it strives to develop a deeper and more vibrant securities market in the Philippines.
The use of Libor, which is the benchmark rate for interbank lending, will expire on June 30 due to scandals involving alleged rate manipulation. In the meantime, the central bank will use an overnight rate based on the 28-day Bangko Sentral ng Pilipinas (BSP) Bill rate. The BSP plans to introduce a new reference rate by January 2024 after consulting with industry players.
The BAP affirms the market confidence in BVAL, citing its rigorous back-testing and ability to perform straight through processing. The benchmarks are compliant with international standards and are supported by regulatory issuances from both the BSP and the Securities and Exchange Commission (SEC). The BAP welcomes initiatives to enhance the benchmarks and is committed to working with regulators to ensure system-wide testing, accreditation, and acceptance by all market stakeholders.
The BAP also highlights the active trading of 5-year, 7-year, and 10-year securities in the market, as well as the strong interest in 12-year, 15-year, and 20-year bonds. These securities provide sufficient support for pricing bank products and marking-to-market of banks’ own portfolios. The BAP acknowledges that the Philippine market benefits from a globally recognized benchmark methodology used in over 100 jurisdictions.
—With reports from Ronnel W. Domingo and Miguel R. Camus
READ: As Libor nears end, BSP tells banks to start transition to other benchmarks
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
