THE Bureau of the Treasury (BTr) is eyeing to trigger its Panda bond issuance this week, if market conditions are seen to be favorable to the republic.
According to Deputy Treasurer Erwin D. Sta. Ana, the BTr might trigger the Panda bond issuance this week, marking the second foray of the Philippines in the renminbi (RMB) market under the Duterte administration.
“Well, we are still watching the markets now, but as the Treasurer has mentioned we may go ahead this week if there’s an opportunity. But we are still looking at the markets at this time. There’s really no pressure for us to launch but rather we are looking for that sweet spot,” Sta. Ana said.
The BTr is looking at a RMB 2.5 billion issuance larger than the previous RMB 1.46 billion, with no final tenor yet determined, according to Sta. Ana.
“So as we have said in the past, this Panda bond issuance could have been done earlier on, but of course there are things that are beyond our control such as the Nafmii [National Association of Financial Market Institutional Investors] and PBOC [People’s Bank of China] approvals before. So now, it’s really up to market conditions if we are going to [trigger] since we have secured all approvals, so far nothing’s preventing us from launching if that time comes,” he added.
The market conditions being looked at right now have to do with developments in the trade row between China and the United States, among others.
“Obviously, we are in the middle of, you know, retaliatory action between the US and China, so we will closely monitor what’s happening as it affects the Chinese interbank market. We’ll see how the benchmark moves in the next couple of hours or days, so we will see,” he said.
In April 2019, National Treasurer Rosalia V. de Leon told reporters that the BTr is looking at tenors for the Panda issuance of three or five years.
The government earlier reported that it was going to trigger its Panda bond issuance in April, but this was pushed back as the BTr waited for approvals from Chinese regulators.
The country’s first Panda bond issuance happened in March 2018, with the awarded security amounting to RMB 1.46 billion with a three-year maturity. The bonds fetched a spread of only 35 basis points over the benchmark.
The Philippines set a record in the Panda bond market, as almost 90 percent was cornered by offshore or overseas buyers, with overwhelming demand pushing the coupon rate to its lowest at 5 percent, according to the Department of Finance (DOF). The Philippines’ offering was 6.3 times covered with RMB 9.2 billion orders.
Asked if the recent euro bond issuance of €750 million affects the timing of the Panda bond issue, Sta. Ana replied in the negative.
“We don’t see any adverse effect on the later issuance, which is this Panda bond, because it’s a totally different market and different set of investors,” he explained.
Meanwhile, in line with the other possible offshore securities, the BTr said that it is already working on completing documentation requirements for the samurai bond issuance being eyed during the third quarter of this year, while a global bond issuance is also an option this year.
In terms of retail Treasury bonds the issuance of another RTB will have to depend on the spending performance of the government, with no concrete plans yet from the Treasury.
“That we have to watch carefully, where we are in terms of the cash buffer that we have…. We are still monitoring the releases of DBM [Department of Budget and Management] and how the agencies will catch up; we haven’t seen any developments on that,” he said.