THE Philippines will issue its inaugural 1.46-billion (approximately P12 billion) worth of renminbi-denominated bonds, or Panda bonds, on March 20, 2018, the Investor Relations Office of the Bangko Sentral ng Pilipinas said Monday.
The Panda bonds, with a three-year tenor, will be issued in the onshore Chinese bond market today (March 20), with settlement set on March 23.
“We are upbeat about this activity because of the significant interest from the market based on the inquiries and feedback we have received,” National Treasurer Rosalia de Leon said in a statement.
The issuance follows an international deal roadshow by the Philippine delegation led by de Leon and Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo. The delegation in the roadshow held from March 14-16 met potential investors in Singapore, Hong Kong, and China to expound on the terms of the bond issuance and to provide updates on the Philippine economy.
The Philippine delegation’s economic briefing received overwhelming participation, especially from onshore investors in Beijing.
“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 IRO said.
Backed by the Philippines’ strong macroeconomic fundamentals, the bonds are rated “AAA” by China’s Lianhe Credit Rating Co. Ltd.
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.
The IRO said the Panda bonds issuance was part of the Philippine government’s efforts to diversify its investor base. The RMB proceeds will be deposited with the Bangko Sentral. Once converted, the peso proceeds will help fund government infrastructure projects and other financing requirements.
“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.
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. They stressed the public spending program on human capital development to realize the country’s demographic dividend from its young population.