PH, China thresh out $200-m bPanda bonds
THE government is working with the Chinese regulators to get the much-needed approval for the planned Panda bond issuance of the Philippines worth $200 million in China, Finance Secretary Carlos Dominguez III said Friday.
Dominguez said in a statement the government was in talks with the Chinese central bank (People’s Bank of China) and the Bank of China.
“The Panda bond market is regulated by China’s central bank, PBOC. As such, any potential issuer first applies through the PBOC prior to any other Chinese regulator,” Dominguez said.
“As of the moment, we are working with the Bank of China on the internal and external approval by the PBOC. The terms have to be discussed further,” he said.
Early this year, Dominguez announced the plan of issuing Panda bonds in China as part of the government’s efforts to raise additional funds to help finance the government’s ambitious “Build, Build, Build” infrastructure program.
Under the program, the government aims to build railways, airports, seaports, highways and irrigation projects to further stimulate domestic economic activities in the countryside.
The government also plans to put up a 24-kilometer subway in Metro Manila to decongest the metropolis of heavy traffic that has been causing an approximately P2.4-billion economic loss everyday.
Dominguez also said the government was considering issuing Samurai bonds in the future for the same purpose.
He said the government’s plan of borrowing 80 percent from the domestic market and 20 percent in foreign currencies remained unchanged.
“We will therefore remain active in the foreign markets,” he said.
Dominguez in April bared the government’s plan to issue the Panda bonds during the first Dutertenomics Forum held at the Conrad Hotel in Pasay City.
A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer sold in the People’s Republic of China. The first two Panda bonds were issued in October 2005 by International Finance Corp. and the Asian Development Bank.
Dominguez said the lineup of major infrastructure projects under the Duterte administration would require the government to explore “hybrid” financing arrangements.
He said the proposed hybrid financing arrangements would combine development aids and loans to raise more funds for future projects.
The Philippines previously entered into similar financing arrangements for other infrastructure developments. These projects include Laguindingan Airport in Misamis Oriental, which was built through a combination of loans from the Korea Economic Development Cooperation Fund and an export loan from Korea Eximbank.