PH raring to test Chinese waters for landmark panda bonds

happen as early as next week with the issuance of $200 million in three-year panda bonds, Finance Secretary Carlos G. Dominguez III said Wednesday.

Dominguez told participants of the 28th Inter-Pacific Bar Association Annual Meeting and Conference that National Treasurer Rosalia V. de Leon was already in China for a road show on the landmark issuance.

Panda bonds are renminbi-denominated debt paper sold in China by non-Chinese companies and governments.

On the sidelines of the event, Dominguez told reporters that De Leon and her team were already assessing market conditions in China to see if it would be a good time to sell panda bonds.

If yields prove healthy enough, the issuance would push through next week or anytime within the month, Dominguez said.

The Philippine government earlier secured the Bank of China’s approval to issue panda bonds worth 1.456 billion renminbi or about P12 billion. Proceeds would be deposited as part of Philippines’ international reserves, the Department of Finance said last Monday.

The planned panda bond issuance was given the highest rating of ‘AAA’ with a stable outlook by China Lianhe Credit Rating Co. Ltd., a top Chinese debt watcher.

According to the DOF, Lianhe took note of the Philippines’ “strong and consistent economic growth, low level of external debt and ample foreign and current account reserves as plus factors for its float this year.”

Also, the credit rating agency “factored in the strong economic ties between Manila and Beijing, and the Duterte administration’s stable source of payment from growing government revenues,” the DOF added.

“Lianhe Ratings expects the Philippines to have a GDP [gross domestic product] growth of around 6.8 percent in 2018. At the same time, the unemployment rate of the Philippines is expected to remain stable and CPI [consumer price index] growth may stay within the target band [of 2-4 percent] set by the BSP [Bangko Sentral ng Pilipinas],” it said in a report.

The debt watcher also noted President Duterte’s 10-point socioeconomic agenda was slowly taking shape with the help of the first package of the comprehensive tax reforms, the Tax Reform for Acceleration and Inclusion (TRAIN) law.