PH defers panda bond sale amid coronavirus threat

Amid the COVID-19 outbreak, the Philippines has deferred its plan to sell renminbi-denominated panda bonds in China this month even as domestic demand for government securities remained robust.

The Bureau of the Treasury on Monday (March 9) sold all P20 billion in T-bills, with the auction oversubscribed by 2.5 times as tenders across the three tenors totaled P53 billion.

The P6 billion in benchmark 91-day T-bills fetched an average rate of 3.024 percent, up from 3.013 percent last week.

For P6 billion in 182-day IOUs, the rate declined to 3.312 percent from 3.324 percent.

For the P8 billion in 364-day debt paper, the annual rate went down to 3.588 percent from 3.684 percent previously.

Even as the 91-day T-bill rate inched up, all rates were below those in the secondary market, National Treasurer Rosalia V. de Leon told reporters after the auction.

De Leon attributed the strong demand for T-bills to onshore liquidity, while the rates of the longer tenors declined on expectations of another interest rate cut by the Bangko Sentral ng Pilipinas (BSP) following the US Federal Reserve’s emergency cut last week.

Lower global oil prices and the COVID-19 outbreak also pushed rates down, de Leon added.

However, the Philippines had to postpone its planned sale of panda bonds initially scheduled this March, De Leon said.

She said the Treasury may defer selling in the panda market during the first half even as it previously wanted to offer offshore bonds in China, Japan, and the US.

The Philippines sold panda bonds in 2018 and 2019.

Edited by TSB