Panda, euro bond issues seen within May

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 de Leon told a press conference on Wednesday that the issuance of renminbi- and euro-denominated debt paper would be “very soon” or before June this year.

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 that 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.

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—
would allow the government to save about P3 billion in interest payments for commercial bond issuances until 2022.

Over the weekend, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno nonetheless told the Inquirer that the Monetary Board—the BSP’s highest policy-making body—has 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 and the National Association of Financial Market Institutional Investors for the upcoming panda bond issuance in China.

She said the Treasury was closely watching ongoing market developments and would await the Monetary Board’s decision on interest rates when it meets today 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 might be downscaled to $200-300 million 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 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 is 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 in 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 in January.