Government eyes up to $500 million panda bond issue in April

MANILA, Philippines — The government is eyeing to return to the Chinese onshore market in April with the issuance of renminbi-denominated panda bonds, the Bureau of the Treasury (BTr) said yesterday.

In an interview, National Treasurer Rosalia De Leon said this is in line with the government’s previous statements that it would return to the Chinese bond market after about 12 months from the previous issuance.

“That’s around April. The same thing we did last year, the 12-month cycle,” De Leon said.

The government successfully raised 1.46 billion renminbi ($230 million) from the issuance of three-year panda bonds in March last year.

De Leon earlier said the BTr is considering to issue around $300 to $500 million worth of panda bonds for the upcoming issuance.

In preparation for the fund raising activity, De Leon said the government is set to conduct roadshows in various areas in China, including Beijing, Nanjing, Suzhou, and Xiamen. This will happen after a Philippine Economic Briefing in Beijing on March 20 and will last until March 23.

In addition to panda bonds, De Leon said the Philippines is also eyeing another samurai bond issuance in August, one year after the country made a comeback in the Japanese onshore market last year.

The national treasurer earlier said the samurai bond float may have a volume ranging from $1 billion to $1.5 billion.

Also in the pipeline is another dollar denominated global bond issuance, De Leon said.

The national government borrows from both local and foreign creditors to finance its budget deficit, which is capped at 3.2 percent of the gross domestic product (GDP) this year.

For 2019, the government is expected to borrow P1.19 trillion, 20 percent higher than the 2018 program of P986 billion, in expectation of the higher fiscal deficit ceiling.

Of the amount, 25 percent or P297.2 billion is projected to come from foreign lenders, while 75 percent or P891.7 billion would be sourced from domestic creditors.

De Leon said the BTr has yet to determine if this borrowing mix would be adjusted pending the meeting of the Development Budget Coordination Committee (DBCC) this year.