PH’s first panda bond sale in China set today

The Philippines’ first foray into the Chinese debt market is happening today, March 20, with the issuance of three-year panda bonds worth 1.46 billion renminbi or about P11.9 billion, the government’s Investor Relations Office said Monday.

The IRO said the settlement of the IOUs issued in China by non-Chinese governments or firms would be on March 23.

“The issuance will be taking advantage of the bond connect scheme, which allows offshore investors to participate. Demand from both onshore and offshore investors will allow the (Philippines) to secure a favorable rate upon pricing date,” the IRO said.

According to the IRO, the renminbi proceeds of the panda bond sale would be deposited at the BSP as part of its international reserves and then converted to peso and deposited also at the BSP.

“The proceeds will help fund government infrastructure projects,” the IRO added.

The IRO quoted National Treasurer Rosalia V. de Leon as saying that the government was “upbeat” about its inaugural panda bond issuance “because of the significant interest from the market based on the inquiries and feedback we have received.”

Last week, a Philippine delegation led by De Leon and Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo met with potential investors in China, Hong Kong and Singapore via an international deal road show in order to explain the terms of the panda bond sale as well as update investors about the Philippine economy, the IRO said.

According to the IRO, the Philippines’ maiden issue of panda bonds affirmed the country’s improving relations with China and the increasing relevance of the renminbi, citing that the Chinese currency was included by the IMF in its special drawing rights’ basket of currencies in 2016.