Warm reception for the Philippines’ second Panda Bonds issuance

May 16, 2019

The Republic of the Philippines has successfully issued its renminbi-denominated Bonds (Panda Bonds) of 2.5 billion renminbi with a tenor of three years on Wednesday, the Department of Finance (DOF) said Thursday.

This is the second Panda Bonds issuance for the Philippines after the first one in March 2018.

The bonds were priced at 3.58 percent, which allowed the Philippines to achieve a tight spread of 32 basis points above the benchmark.

The order book reached a total of more than RMB 11 billion, reinforcing a strong vote of confidence in the Republic’s economic stewardship and transformative reform agenda, the DOF said.

In terms of geographical breakdown of investors, leveraging on the bond connect scheme, 42.4 percent of final allocation was placed to China’s onshore investors, and 57.6 percent went to overseas investors.

Major investors include commercial banks from China’s onshore and offshore markets.

China Lianhe Credit Rating Co. Ltd. rated the Philippines and this issuance as AAA, its highest rating. Aside from the local AAA rating, the Philippines has an international rating of Baa2/BBB+/BBB (Moody’s/S&P/Fitch).

Reacting to the favorable results of the Panda Bonds issuance, Finance Secretary Carlos Dominguez III said: “The success of the second ‘Panda’ bond float, which has come on the heels of the similarly well-received float of Euro-denominated offshore securities, illustrates the high level of confidence of the international markets in the Philippines amid the game-changing reforms initiated by President Duterte to sustain its upward growth trajectory and attract more investments.”

“Such confidence by the global investor community stems from our solid creditworthiness brought about by the government’s unwavering commitment to sound macroeconomic policies and fiscal discipline in the face of domestic and external challenges,” Dominguez added.

Expounding on the gains from the positive market perception, National Treasurer Rosalia de Leon said: “The success of our Panda bonds issuance, along with other recent issuances, resonates the positive market sentiment on Philippine credit. Through strategic and timely offerings, we are able to tap various markets even in a challenging environment that allowed for the Republic that resulted in more cost-efficient pricing.” DMS