PH 1st Panda Bond issuance set on March 20

MANILA — Finance Secretary Carlos Dominguez III is optimistic of the Philippines’ first foray into the Panda bond market, with the country’s initial renminbi-denominated securities issuance set on March 20, 2018.

“We are confident of the success of the Philippines first venture in the Panda Bond market. This is one of the concrete results of President Duterte’s independent foreign policy,” he said in a statement Monday.

The Investors Relations Office (IRO) on Monday announced that the country is set to issue RMB1.46 billion-worth of three-year Panda Bond on March 20, with settlement data set on March 23, 2018.

“We are upbeat about this activity because of the significant interest from the market based on the inquiries and feedback we have received,” National Treasurer Rosalia de Leon said.

The scheduled debt paper issuance will be held after De Leon and Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo headed a Philippine delegation to an international deal roadshow to meet potential investors in Singapore, Hong Kong and China last March 14-16.

The IRO said the country’s initial Panda Bond issuance will be tapping the Bond Connect scheme “which allows offshore investors to participate.”

“Demand from both onshore and offshore investors will allow the Republic to secure a favorable rate upon pricing date,” it said.

Earlier, China’s Lianhe Credit Rating Co.

Ltd. gave the Philippines first renminbi-denominated debt securities a “AAA” rating after citing the country’s strong macroeconomic fundamentals.

Proceeds of the bond issuance will be deposited with the BSP and will form part of its international foreign currency reserves and will be converted to peso to help fund the government’s massive infrastructure program, among others.

“The Panda bonds issuance is very timely given the sustained strengthening of the Philippines’ credit profile, which is a result of long history of vital structural reforms. Investors have been encouraged to invest because the Philippines is one of the fastest growing economies in the region with a strong record in inflation management. Moreover, the country enjoys resilient external payments position, improving debt dynamics, and stable banking system,” Guinigundo said.

The IRO statement added that in 2016, renminbi was included by the International Monetary Fund (IMF) in its Special Drawing Rights’ (SDR) basket of currencies.