BSP chief mulls revival of interest rate swaps

The Bangko Sentral ng Pilipinas (BSP) chief is looking at reviving the interest rate swap (IRS) market in the next two years, in hopes that players will be active enough to produce a curve that can eventually become a good benchmark yield curve.

- KEISHA TA-ASAN

During the membership meeting of the Financial Executives Institute of the Philippines (FINEX), BSP Governor Eli Remolona Jr.said financial market players in the Philippines used to do more swap transactions, but these have disappeared.

"So I would like to revive the swaps market, the IRS markets, and insist on market making at least the five-year maturity, which is the sweet spot for fixed income securities, for corporate bonds, for derivatives contracts. Maybe that will work," he said.

According to Remolona, a good benchmark yield curve is crucial in deepening the capital markets, as there has been a lack of liquidity in the yield curve.