The Department of Finance (DOF) is thinking of selling a samurai bond sometime next year as part of the larger goal of diversifying the government’s funding sources.
The proposed sale could prove months ahead of a similar exercise eyed for a renminbi-denominated sovereign IOU, more known as panda bonds, being eyed for sale next month.
According to Finance Secretary Carlos G. Dominguez III, the Bureau of the Treasury (BTr) under the leadership of National Treasurer Rosalia V. de Leon, is currently looking into the economics of doing a samurai bond.
“We also discussed the possibility of samurai bonds, and I told her [de Leon] that she should make a position on that. We’ll probably do a samurai bond sometime next year,” Dominguez told financial reporters.
A samurai bond is a yen-denominated bond issued in Japan by non-Japanese companies subject to Japanese
regulations.
“First, [this will] diversify our sources. We haven’t done a samurai bond in a long time. But we have to get indication, authority, appetite [or if it] will be tapered. We’ll have to get indication on interest rates, what the exchange risks are going to be. So she’s making that study,” he quickly added.
Samurai bonds provide the issuer access to Japanese capital, which can be used for domestic investments or for financing operations outside Japan.
Earlier, the BTr announced that it would tap the panda market through the issuance of panda bonds estimated at $200 million.
De Leon said the government is keen on the panda bond issuance seen issued by November this year.
The BTr earlier reported that it is finalizing registration requirements with the Chinese government.
The documentation needed by the Philippine government to make the sale of panda bonds happen in the fourth quarter this year is nearly complete.
The DOF said the BTr tapped the Bank of China and Standard Chartered Bank as lead issuers for the $200-million
sale exercise.
Panda bonds are renminbi-denominated securities from a non-Chinese issuer but sold in the People’s Republic of China.
The Philippines last sold samurai bonds in 2010 worth $2.5 billion that allowed the government to complete its commercial funding exercise that year.
The IOUs had partial backing from the Japan Bank for International Cooperation, which helped explain in part the excess in demand from Japanese investors who submitted far more subscriptions than what actually was available.
The samurai exercise was done by private placement in which insurance companies, cooperatives and others partook of the offer.