Finance Secretary Carlos Dominguez III said the government will likely issue samurai bonds next year in a bid to diversify sources of funding for infrastructure and development projects.
“We will probably do a samurai bond sometime next year, first, to diversify our sources. We haven’t done a samurai bond in a long time. But we have to get indication on interest rates and what the exchange risks are going to be,” Dominguez said over the weekend.
He said National Treasurer Rosalia de Leon was currently studying the terms for the bonds’ issuance.
Dominguez said it would be the right move to make issuances sooner than later, in preparation for the government’s higher expenditure program for 2018.
A samurai bond is a yen-denominated bond issued in Tokyo by non-Japanese companies, and is subject to Japanese regulations.
Dominguez also said he was hoping that the issuance of Panda bonds worth $200 million, which was announced in September this year, would happen before the close of the year. A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in the People’s Republic of China.
Meanwhile, Dominguez said the planned $1-billion global bonds might be issued early January next year.
“Same thing, as I said the conclusion is better early than late,” he said.
Dominguez said the US and the world economy seemed to be improving”•factors that should be considered before proceeding with any bond’s issuance.
De Leon earlier said Chinese investors expressed interest in the planned Panda bonds issuance worth $200 million by the Philippine government later this year.
She said the Philippine delegation that conducted a non-deal roadshow in China recently met about 13 potential investors, a combination of banks and asset management corporations.
“So basically they are very enthusiastic about the growth narrative of the Philippines. It is the first time that we are doing this on an investor roadshow, on a non-deal basis, 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.
Dominguez earlier announced a plan to issue Panda bonds in China to raise additional funds for 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.
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 P2.4 billion in productivity loss daily.
Dominguez said the government’s plan to borrow 80 percent from the domestic market and 20 percent in foreign currencies would remain unchanged. “We will therefore remain active in the foreign markets,” he said.
