Key Takeaways
- • The Philippine banking industry expects to launch a new yield curve benchmark by end-2026, with backing from the Bangko Sentral ng Pilipinas (BSP), to replace the current "choppy" Philippine Bloomberg Valuation (BVAL) standard for debt pricing.
- • Bankers Association of the Philippines secretary Paul Favila, who also serves as CEO of Citi Philippines, stated the new benchmark must demonstrate price movements aligned with BVAL before market transition can occur, requiring collaboration between regulators and lenders.
- • The BSP adopted a global risk-management framework in 2025 for repo transactions and launched a peso interest rate swap market to strengthen the yield curve infrastructure; outstanding interbank repo volume reached P111.25 billion as of October 2025.
- • The initiative supports the central bank's strategic objective of reducing banking sector funding dependency by developing a deeper capital market that can serve as a "spare tire" during financial crises.
- • BSP Governor Eli Remolola Jr. identified a stronger repo market and revived peso interest rate swaps as critical components for building a more reliable yield curve benchmark.
Summary
The Philippine banking sector is moving toward establishing a new yield curve benchmark before year-end 2026, targeting a more dependable reference point for debt pricing than the existing Philippine Bloomberg Valuation standard. Paul Favila, secretary of the Bankers Association of the Philippines and chief executive of Citi Philippines, expressed confidence in the timeline, stating "by the end of the year, we should have something happening," while emphasizing the collaborative nature of the effort with regulators.
The Bangko Sentral ng Pilipinas has actively supported the initiative, with both central bank officials and commercial lenders currently collating historical data to establish credibility in the new benchmark. A critical prerequisite for market transition is demonstrating that the new gauge moves in tandem with the incumbent BVAL standard, ensuring continuity and confidence during the transition period. Favila characterized the regulatory engagement as ongoing and cooperative, noting that successful implementation "takes two to tango" and that BSP officials remain aligned with the banking sector's objectives.
The infrastructure for this benchmark has been substantially strengthened through recent central bank initiatives. The BSP adopted a global risk-management framework in 2025 to govern repo transactions and previously launched a peso interest rate swap market to deepen local capital market depth. According to central bank data, outstanding interbank repo volume reached P111.25 billion as of October 2025, positioning repos as the second-largest market segment after foreign exchange swaps at P146.65 billion. BSP Governor Eli Remolola Jr. has characterized the current yield curve as "choppy" and identified a more robust repo market combined with revitalized peso interest rate swaps as essential mechanisms for constructing a more reliable benchmark.
The broader strategic context reflects the BSP's commitment to reducing systemic reliance on traditional bank funding channels by cultivating a deeper, more resilient capital market infrastructure that can function as a stabilizing alternative during banking sector stress or crises.
The Bangko Sentral ng Pilipinas has actively supported the initiative, with both central bank officials and commercial lenders currently collating historical data to establish credibility in the new benchmark. A critical prerequisite for market transition is demonstrating that the new gauge moves in tandem with the incumbent BVAL standard, ensuring continuity and confidence during the transition period. Favila characterized the regulatory engagement as ongoing and cooperative, noting that successful implementation "takes two to tango" and that BSP officials remain aligned with the banking sector's objectives.
The infrastructure for this benchmark has been substantially strengthened through recent central bank initiatives. The BSP adopted a global risk-management framework in 2025 to govern repo transactions and previously launched a peso interest rate swap market to deepen local capital market depth. According to central bank data, outstanding interbank repo volume reached P111.25 billion as of October 2025, positioning repos as the second-largest market segment after foreign exchange swaps at P146.65 billion. BSP Governor Eli Remolola Jr. has characterized the current yield curve as "choppy" and identified a more robust repo market combined with revitalized peso interest rate swaps as essential mechanisms for constructing a more reliable benchmark.
The broader strategic context reflects the BSP's commitment to reducing systemic reliance on traditional bank funding channels by cultivating a deeper, more resilient capital market infrastructure that can function as a stabilizing alternative during banking sector stress or crises.
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