DOF mulls regular ‘Panda’ bond issuance

The Duterte administration would likely tap the Chinese debt market on a regular basis following the government’s successful maiden offer in March, the Department of Finance (DOF) said.

Finance Secretary Carlos G. Dominguez III said the Philippines received “substantial demand” for the recent 1.46 billion renminbi (RMB) maiden “panda” bond sale that allowed the government to push a coupon rate of 5.0 percent.

According to Dominguez, the rate on the Philippine debt notes was at the lower end of the price range of between 5.0 percent and 5.6 percent, while demand was more than six times oversubscribed at 9.22 billion RMB.

Asked if the Duterte administration plans to regularly issue Panda bonds, Dominguez said “mostly likely” in a text message to reporters.

“The achieved coverage ratio is the largest all-time among any sovereign Panda issuance,” Dominguez said, quoting a report submitted by National Treasurer Rosalia V. De Leon.

In a recent report by capital markets magazine IFR Asia, the publication said that the “Philippines shook up the Panda bond market with an exceptionally tight debut that underscored the growing role of overseas investors in onshore renminbi financings.”

IFR said the “Philippines smash through pricing expectations and leaving other issuers scrambling to understand the achievement.”

Dominguez said the inaugural three-year Panda bond’s coupon rate of 5.0 percent was 35 basis points over the two-year China benchmark rate of 4.65 percent.

“The Philippine government’s successful inaugural issuance of Panda bonds highlights the investor confidence that the country enjoys on the back of its strong credit profile,” Dominguez said.

The finance chief also said the Duterte administration is committed to sustaining the growth momentum and making the economy a more inclusive one by way of massive investments in infrastructure and human capital development.