FINANCE Secretary Carlos Dominguez III and the top executive of the Bank of China signed this week an underwriting agreement for the planned $200-million Panda bond float of the Philippine government.
The DoF said in a statement Friday Dominguez signed the agreement with Bank of China chairman Chen Siqing in ceremonies held in Malacañang. Bank of China is the lead underwriter for the issuance.
Dominguez thanked the Bank of China for assisting the government in facilitating the planned Panda bond issue and in organizing a Philippine economic briefing in September in Shanghai to enable local officials to present to Chinese investors the economic gains of the Philippines.
As lead underwriter, the Bank of China committed to form an underwriting team that will purchase the Panda bonds that the Philippine government will issue, and then resell it to the Chinese market for a profit.
The underwriting agreement also named Bank of China as the book-runner of the Panda bond issue.
“We thank the Bank of China for taking the lead in helping us gain a foothold in the panda bond market. We are very happy that the BOC has come to our assistance. We also welcome the Bank’s efforts in bringing the Philippines’ growth narrative to the Chinese investors as demonstrated in the last Philippine Economic Briefing in Shanghai, and look forward to a strengthened partnership,” Dominguez said at the signing ceremonies.
National Treasurer Rosalia de Leon said the Panda bond issue would “diversify the government’s funding sources and provide benchmarks for other Philippine issuers in the onshore market, particularly at this time that the renminbi is a reserve currency.”
“The bond issue will also complement the financial support from China for the implementation of critical infrastructure projects,” she said.
A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer sold in China. The first two Panda bonds were issued in October 2005 by International Finance Corp. and the Asian Development Bank.