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Keisha Ta-Asan - The Philippine Star
March 11, 2025 | 12:00am
In this file photo taken on February 08, 2021 A branch of Citibank is seen in the Financial district in New York on February 8, 2021. Citigroup announced on April 15, 2021, it will exit 13 international consumer banking markets, including China and India, shifting its focus to wealth management and away from retail banking where it lacks scale.
Kena Betancur / AFP
MANILA, Philippines — Citi Philippines is optimistic about the development of the country’s capital market, particularly the peso Interest Rate Swap (IRS) market, as it continues to push for broader participation from both local and offshore investors.
Paul Favila, country head at Citi Philippines and chairman of the Bankers Association of the Philippines (BAP) Open Market Committee, said discussions are ongoing to open the peso IRS market to offshore investors.
“We are also looking at opening up that market as we should, even for offshore investors. Because they need that, right? If you want to invest in the Philippines, you need to have a way to hedge yourself,” he said.
Favila noted that while there has been notable progress in trading volume, adoption of the IRS still has a long way to go. The key is to ensure that the market is not limited to interbank transactions but is actively utilized by end-users, such as corporate clients and institutional investors.
“We want to make sure that there is more reception coming from the end-users. I always stress that this is not a market just among the banks, right? Otherwise, it doesn’t serve a purpose. It becomes speculative,” Favila said.
The enhanced peso IRS market went live in November last year, marking a significant step toward advancing capital market development and providing market participants with improved tools for managing interest rate risks.
The peso IRS allows investors to manage interest rate risks by exchanging fixed and floating interest rate payments. This is particularly crucial for foreign investors looking to protect their assets amid market fluctuations.
As part of the broader capital market development agenda, Favila said he is optimistic about ongoing efforts to strengthen the repurchase agreement (repo) market in coordination with the Bangko Sentral ng Pilipinas (BSP).
The development of the peso IRS and other capital market instruments is seen as a crucial component in deepening the Philippines’ financial market, fostering more investment inflows, and providing robust risk management tools for investors.
