MANILA, Philippines - The Philippine bond market booked the third-fastest growth rate in emerging East Asia in the July to September period, according to a report released by the Asian Development Bank (ADB) on Thursday, November 22.

In the Asia Bond Market report, the Manila-based multilateral bank said the Philippine bond market posted an annual growth rate of 16.1% in the third quarter.

The report said other bond markets that performed well were ASEAN-member countries. These include:

• Vietnam - 21.4%
• Singapore - 18.1%
• Malaysia - 15.7%
• Thailand - 14.4%

"The region's most rapidly growing bond markets on a year on year basis in the third quarter were those of Vietnam, Singapore, the Philippines, Malaysia, and Thailand," ADB said.

The ADB said total bond issuances made by the corporate and government bond markets reached $97 billion.

Government bonds issued in the third quarter posted a 14.7% growth to $79 billion while corporate bonds issued increased by 26.1% to $12 billion.

"Growth in Singapore, the Philippines, and Thailand was led by their respecive corporate bond markets," the report read.

The Manila-based lender, however, cautioned that there are risks "looming large on the horizon" for emerging East Asia's local currency bond markets.

The report stated that volatility spillovers from mature markets to local bond markets are a major risk.

The report showed that external shocks and volatility are also increasingly being transmitted between domestic markets and between markets across Asia as they expand and their influence grows.

"The United States could fall over the fiscal cliff and the new Chinese leadership has to deal with slowing growth in the world’s second largest economy. A surge in volatile capital inflows and rising inflation in the region are also potential threats," ADB Office of Regional Economic Integration Head Iwan Azis said.

At $6.2 trillion, ADB said emerging East Asia's local currency bond market was 3.5% bigger than at end-June 2012 level, and 11% larger than end-September 2011.

The Asia Bond Monitor assesses the markets of Hong Kong, China; Indonesia; the Republic of Korea; Malaysia; the Philippines; Singapore; Thailand; and Vietnam. - Rappler.com