THE order book for the republic’s second Panda bond issuance is more than four times oversubscribed at renminbi (RMB) 11 billion, showcasing what officials described as the strong vote of confidence in the Philippines’s economic stewardship and transformative reform agenda.
A statement issued by the Bureau of the Treasury (BTr) on Wednesday night said the Panda bonds issued by the Philippines—amounting to RMB2.5 billion with a three-year tenor —were priced at 3.58 percent, allowing the Republic to achieve a tight spread of 32 basis points (bps) above the benchmark.
“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,” said National Treasurer Rosalia V. de Leon.
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 both 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 from Moody’s, Standard and Poor’s (S&P) and Fitch Group Inc. (Fitch).
“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,” said Finance Secretary Carlos G. Dominguez III.
Philippine government officials held a nondeal road show in China in March before the issuance of the Panda bonds to let more Chinese investors know about the growth story of the Philippines.
De Leon said the nondeal road show in China was met with strong interest for the Philippines as more than 500 Chinese participants attended the Philippine Economic Briefing, with a number of rural banks expressing interest in the Panda bonds.
Five key cities in China were visited for the nondeal road show: Beijing, Nanjing, Fuzhou, Suzhou and Xiamen.