Panda, euro bond issuances coming ‘very soon’

MANILA, Philippines — The Philippines’ panda and euro bond offerings will likely happen within this month as the government takes advantage of the recent credit rating upgrade from S&P to borrow commercially at a cheaper rate.

National Treasurer Rosalia V. de Leon said in a televised press conference Wednesday that the issuance of renminbi- and euro-denominated debt paper will be “very soon,” such that they could happen before next month.

De Leon said there was “overwhelming interest” among European and even Asian and American investors in the country’s return to the euro bond market, which the government last tapped in 2006.

She earlier said they were looking at a benchmark offering or a minimum of $500 million in euro bonds, while potential investors expressed interest in tenor of between seven and 10 years during the roadshow undertaken by the government last week in the European cities of Frankfurt, London, Milan, Paris, and Zurich.

Over the weekend, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno nonetheless told the Inquirer that the Monetary Board — the BSP’s highest policy-making body — had yet to green-light the planned euro bond sale.

Also, De Leon said the Bureau of the Treasury already secured the approvals from the People’s Bank of China (PBOC) and the National Association of Financial Market Institutional Investors (Nafmii) for the upcoming panda bond issuance in China.

She said the Treasury was closely watching ongoing market developments and will await the Monetary Board’s decision on interest rates when it meets Thursday to determine the timing for the panda and euro bonds.

De Leon had said that given ample cash still unspent as the government operated using a reenacted budget at the start of the year, the panda bond offering may be downscaled to $200-300 million worth from the earlier plan of at least $500 million.

A smaller offering could also reduce the tenor to just one, instead of the previous plan to sell the IOUs in two tenors of three and five years, she had said.

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

Besides the panda and euro IOUs, the government was also looking at again selling yen-denominated samurai bonds and another round of US dollar-denominated global bonds in the second half.

Last August, the Philippines sold 154.2-billion yen worth of samurai bonds across three tenors, ending the country’s eight-year absence in the Japanese debt market.

The Philippines already borrowed $1.5 billion in new 10-year global bonds last January.

The government had programmed gross borrowings this year of P1.189 trillion, of which the bulk or P906.2 billion will be sourced locally through the sale of treasury bills and fixed-rate bonds.

Gross external borrowings for 2019 would amount P282.7 billion.

These borrowings will finance the government’s priority projects under the national budget as well as the Duterte’s administration’s ambitious “Build, Build, Build” infrastructure program.

De Leon said S&P’s credit rating upgrade for the Philippines to “BBB+” — the country’s highest-ever and two notches above investment grade — will allow the government to save about P3 billion in interest payments for commercial bond issuances until 2022.