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Chinese bank clears Panda bond issue

The People’s Bank of China allowed the Philippines to proceed with the issuance of Panda bonds worth $200 million, Finance Secretary Carlos Dominguez III said over the weekend.

“I am pleased to share with you that the issuance of Panda bonds was approved by People’s Bank of China and NAFMII Feb. 9,” Dominguez said in a message to to Finance reporters. NAFMII refers to the National Association of Financial Market Institutional Investors.

The government earlier moved the planned Panda bond issuance in China to the first quarter of 2018 from the initial schedule of the fourth quarter of 2017 pending approval from the People’s Bank of China.

National Treasurer Rosalia de Leon said the current plan of issuing the bonds in March remained but said “this is subject to good window and competitive pricing.”

Dominguez earlier said that similar to other fund-raising activities, Panda bond offering was subject to favorable market conditions  in the onshore RMB (renminbi) market and would provide competitive pricing compared to other funding options.

The Philippines sent a delegation that conducted a non-deal roadshow in China in the third quarter of 2017 where they met 13 potential investors for the Panda bonds, a combination of banks and asset management corporations.

De Leon said Chinese investors expressed interest in the planned issuance.  “They are very enthusiastic about the growth narrative of the Philippines.... [They are] anticipating that eventually the Philippines would make its first footprint in the Panda market,” she said.

“So they are enthusiastic about what would be the pricing, the tenor, and how it will also provide some liquidity support, so the Bank of China will also be there to provide that kind of liquidity. They are the only ones that can engage on the repo transaction... they are eagerly awaiting when will be the launch...,” she said.

Dominguez said the Panda bond market was regulated by China’s central bank, PBOC. As such, any potential issuer first applies through the PBOC prior to any other Chinese regulator, he said.

Dominguez said the Panda bond issuance was a part of government efforts to raise additional funds to help finance the ‘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.

Topics: People’s Bank of China
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