The Bangko Sentral ng Pilipinas (BSP) is prioritizing the swift adoption of GMRA contracts to facilitate increased repo transactions involving government securities, particularly Treasury bonds. The move is expected to broaden the scope of the country’s repo market, which is currently confined to interbank transactions, reports Bilyonaro.
“The expanded repo market will serve as a robust alternative benchmark to the PESO IRS,” the BSP said, noting that as more banks engage with GMRA, additional repo transactions will likely follow.
In addition, the central bank has implemented peso interest rate swaps (PESO IRS), designed to establish a benchmark yield curve. BSP Governor Eli Remolona was cited by Bilyonaro as stating that the combined impact of the IRS and an expanded repo market will increase trading volumes and enhance liquidity in the local bond and securities markets, providing banks and investors with more capital access.
In conjunction with the GMRA and PESO IRS, the BSP is collaborating with the Bureau of the Treasury and the Department of Finance to introduce more liquid benchmarks in the bond market. The Treasury is set to issue and reopen bonds with specific maturities to increase market depth, creating more liquid investment options for both domestic and foreign investors.