CORPORATE debt issuances are expected to slow down in the third quarter with only two institutions—Union Bank of the Philippines and Ayala Land Inc.— expected to raise funds totaling P5.5 billion from the domestic market, according to one of the country’s most active debt underwriters.

“This significantly low amount of issuances will help bring back the demand to government securities,” First Metro Investment Corp. (FMIC) said.

In recent weeks about 55 percent of the P58 billion worth of corporate papers that were reported in the pipeline was released, including those of SM Investments Corp. Petron Corp., Globe Telecom and Land Bank of the Philippines, FMIC said.

All four offerings were oversubscribed, meaning demand exceeded the size of their offers.

SM raised P10 billion from 5-year and 7-year papers while Petron managed to generate P10 billion, also from 5-year and 7-year bonds.

Globe’s bond issuance raised P5 billion while LandBank’s Tier 2 notes generated P6.9 billion.

“Of the P27-billion worth of corporate papers still in the pipeline, P15 billion worth is more likely to be cancelled,” FMIC said in its research note.

“Planned papers of Ayala Land and UnionBank, amounting to P5.5 billion, would probably be released in the end of the third quarter,” FMIC said.

UnionBank recently said it was looking to issue its Tier 2 notes toward the end of July.

The release dates for the remaining P6.5 billion have yet to be announced, FMIC said, without identifying the prospective issuers.

“In the next couple of months, we expect that no further issuances of corporate long-term bonds will be made,” said FMIC, the investment banking arm of the Metrobank Group. “The sharp decline in corporate issuances, together with inflation declining below 1 percent, should give impetus to a reversal of yields’ current direction.”

The continued drop in inflation, further cuts in central bank key interest rates, and the surplus in government cash operations did little to stabilize, if not lower, the short-term yields of fixed-income papers in May, it said.

The weaker-than-expected economic growth of 0.4 percent in the first quarter and an “oversupply” of higher-yielding corporate bonds had, in fact, caused short-term yields to rise, it said.

“Investors were worried about the continued increase in the supply of bonds. The supply was expected to rise, as the government and corporations opted to use the fixed-income market to generate funds,” it said.