Panda bonds issuance seen after Holy Week

The Philippines’ second issuance of renminbi-denominated debt paper in China will “most likely” be after Holy Week, a ranking Bureau of the Treasury official said on Wednesday.

Deputy Treasurer Erwin Sta. Ana told reporters after the treasury bond auction that the planned panda bond sale would still be in April, but after the Treasury has secured all necessary documentation, including opinion from the Department of Justice and approval from China’s National Association of Financial Market Institutional Investors (Nafmii).

According to its website, Nafmii is “a self-regulatory organization which aims to promote sustainable development of China OTC (over-the-counter) market through innovations, self-discipline and serving market players.”

Sta. Ana said the Treasury was looking at conducting the panda bonds auction in Beijing after Holy Week.

National Treasurer Rosalia de Leon had said they were considering tenors of three and five years to sell a bigger volume of up to $500 million in renminbi-denominated securities for the second panda bond issuance.

In March last year, 1.46 billion renminbi ($230 million) in three-year panda bonds were sold by the Philippine government for the first time in China at a yield of 5 percent.

Meanwhile, the Treasury sold all P20 billion in reissued 10-year T-bonds it offered on Wednesday at an average rate of 5.954 percent, down from 6.196 percent in March.

Tenders amounted P46.47 billion, making the auction more than twice oversubscribed.

To date, the outstanding amount raised by the government from this T-bond series with a remaining life of nine years and nine months stood at P80 billion.

Sta. Ana said the strong demand for treasury bonds showed “market preference for the longer tenors.”

“This is primarily driven by the inflation print—last month’s print and, I think, the view moving forward,” Sta. Ana said.

Inflation slowed to a 15-month low of 3.3 percent in March and the government expects the rate of increase in prices of basic commodities to return within its 3-4 percent target range after hitting a 10-year high of 5.2 percent last year. —BEN O. DE VERA