PH issues $230-M Panda bonds today
The government is issuing its maiden renminbi-denominated bonds today as proceeds from the sale would be used to support the government’s ambitious infrastructure program.
National Treasurer Rosalia V. De Leon announced yesterday that Manila was “all set” for the issuance of its inaugural three-year RMB1.46 billion ($230 million) Panda bonds today.
The debt notes will be issued in the onshore Chinese bond market and will be settled tomorrow (March 23), the treasurer said.
“We are upbeat about this activity because of the significant interest from the market based on the inquiries and feedback we have received,” De Leon said in a statement.
For his part, Finance Secretary Carlos G. Dominguez III said that he is confident of the success of the government’s first venture in the China’s bond market.
“This is one of the concrete results of President Duterte’s independent foreign policy,” Dominguez said in a mobile text message.
The indicative price guidance was at 5.0 percent to 5.6 percent for Manila’s debut offer.
“The issuance will be taking advantage of 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,” the Philippines’ Investors Relations Office (IRO) said.
Backed by the country’s strong macroeconomic fundamentals, the bonds are rated "AAA" by China's Lianhe Credit Rating Co. Ltd.
In the international market, the Philippines 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.
“RMB proceeds of the bond issuance will be deposited with the Bangko Sentral ng Pilipinas (BSP) as part of its international reserves and converted to Peso and deposited at the BSP. The proceeds will help fund government infrastructure projects and other financing requirements,” IRO said.
Guinigundo, meanwhile, said 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.
Both De Leon and Guinigundo also cited during the roadshow the Philippines’ robust growth outlook over the medium term on the back of the government's massive infrastructure program, which comes amid continued observance of fiscal discipline.