PH’s Panda bond issue a market shocker
IFR says it was ‘exceptional’
The Philippines’ inaugural issue of Panda bonds shook up the renminbi-denominated market with an “exceptionally tight debut” that marked the largest oversubscription ever of any sovereign Panda bond float, according to an International Financing Review (IFR) Asia report.
IFR Asia said the Philippines set a record in the Panda bond market as almost 90 percent was cornered by offshore or overseas buyers, helping the Philippines “smash through pricing expectations.”
The final pricing on the Philippines’ Panda bonds “represented a spread of only 35 basis points over the three-year notes of China Development Bank (rated Aa3 by Moody’s and AA- by Standard and Poor’s.”
“No premium at all over the 10 billion renminbi three-year issue of Central Huijin, a unit of sovereign wealth fund China Investment Corp., also priced at five percent last week [March 16],” the IFR Asia report said.
This means that the three-year Philippines’ maiden Panda bond issue was above the benchmark rate, with strong demand pushing the coupon rate to its lowest at five percent.
“Of the five sovereign Panda bond issuers so far, only South Korea, rated five to six notches higher than the Philippines, was priced at a tighter spread over CDB,” the report said.
It likewise pointed out that the Philippines’ offering was 6.3 times covered with 9.2 billion renminbi orders, which is the “biggest book and largest oversubscription of any sovereign Panda to date.”
IFR Asia traced the successful float to the “meticulous planning” by Philippine officials who visited China last year to discuss investment opportunities in the country’s “Build, Build, Build” infrastructure modernization projects with Chinese investors.
Then on March 14 to 16, or a week before the deal, a Philippine team also met with potential investors in a series of international roadshows in Singapore, Hong Kong and mainland China, the report bared.
The Panda bonds were rated “AAA” by China's Lianhe Credit Rating Co. Ltd. The Philippines became the first ASEAN sovereign to issue Panda bonds.
Finance Secretary Carlos G. Dominguez III said “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.”