Philippines’ first ever $230 million Panda bonds issued

By APD writer Melo M. Acuna

**MANILA, March 20 (APD) ** – The Department of Finance said the Philippine government is “all set” for the issuance of its inaugural RMB 1.46 billion (230 million US dollars) worth of renmenbi-denominated funds also known as Panda bonds.

In a statement, the DOF said the Panda bonds will have a three-year tenor and will be issued in the onshore Chinese bond market today, March 20 and settlement is on Friday, March 23.

National Treasurer Rosalia de Leon said they are upbeat about the activity because of the “significant interest from the market” based on the inquiries and feedback.

The issuance follows an international deal roadshow by the Philippine delegation with Ms. De Leon and Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo.

The roadshow took place from March 14 to 16 where they met potential investors in Singapore, Hong Kong and China mainland.

They briefed the investors on the terms of the bond issuance and provided updates on the Philippine economy.

“The Philippine delegation’s economic briefing received overwhelming participation from onshore investors in Beijing,” Ms. de Leon said.

It was learned the issuance will take advantage of the Bond Connect scheme, which allows offshore investors to participate.

The demand from both onshore and offshore investors will further allow the Philippines to secure a favorable rate upon pricing date.

Backed by the Philippines’ strong macroeconomic fundamentals, the bonds are rated “AAA” by China’s Lianhe Credit Rating Co. Ltd. while in the international market, the country is currently rated “Baa2” by Moody’s Investors’ Service and “BBB” by Standard @ Poor’s and Fitch Ratings, all one notch higher than the minimum investment grade for sovereigns.

The Panda bonds issuance is part of the Philippine government’s efforts to diversify its investor base.

It was also learned the RMB proceeds will be deposited with the Bangko Sentral ng Pilipinas.

“Once converted, the peso proceeds will help fund government infrastructure projects and other financing requirements,” the statement added.

Meanwhile, BSP Deputy Governor Guinigundo said the Panda bonds issuance is “very timely” given the sustained strengthening of the Philippines’ credit profile which resulted from the 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,” he further said.

He further explained this is due to the resilient external payments position, improving debt dynamics and stable banking system.

(ASIA PACIFIC DAILY)