Bank of China takes lead in panda bond issuance

MANILA, Philippines — The Philippines has tapped the Bank of China (BOC) as the lead underwriter for its planned issuance of 1.4 billion renminbi-denominated securities or panda bonds, the Department of Finance (DOF) said yesterday.

As lead underwriter, the Bank of China has committed to form an underwriting team which will purchase the panda bonds from the Philippine government, and then resell them to the Chinese market for a profit.

The underwriting agreement also states that Bank of China will serve as the book runner of the panda bond issue.

“We thank the Bank of China (BOC) 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,” Dominguez said.

“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,” he said.

National Treasurer Rosalia De Leon, for her part, said the panda bond issuance would serve to diversify the funding sources of the Philippine government.

She said it would also “provide benchmarks for other Philippine issuers in the onshore market, particularly at this time that the renminbi is a reserve currency.”

De Leon further stressed the offering would complement the financial support China has extended to the country for its flagship infrastructure projects.

However, Philippine officials said the sale of the panda bonds would still depend on market conditions, the possible business risks and the trend in dollar interest rates.