Brandywine Global Predicts Philippine Bonds Will Outperform Asia

Brandywine Global Investment Management predicts that Philippine bonds could become some of the best performers in Asia provided inflation pressures stabilize and geopolitical risks stemming from the Iran war diminish. The asset manager currently holds Philippine debt, anticipating that cooling inflation will enable the Bangko Sentral ng Pilipinas to cut interest rates to support weak economic growth.

Philippine bonds have faced severe pressure this year, with the 10-year yield surging more than 200 basis points—the highest increase in emerging Asia. This volatility was driven by rising oil prices and imported inflation linked to the conflict in Iran. In response, the Bangko Sentral ng Pilipinas implemented the most aggressive tightening policy in Southeast Asia since the war began, raising rates by 50 basis points in October.

While the firm views current yield levels as attractive, it is limiting further purchases due to poor liquidity and the potential for additional yield increases. Portfolio manager Carol Lye noted that the market is positioned to run once inflation stabilizes.