The Department of Finance (DOF) said the grants China provided to the Philippines, as well as its support in the planned panda bond sale, signal its strong support for the Philippines.
According to Finance Secretary Carlos G. Dominguez III, China’s help in the construction of drug-rehabilitation facilities and bridges in Manila indicated its “understanding and sympathy” for the challenges faced by the Philippine government.
The grant would help launch two projects, including the construction of two drug-rehabilitation facilities worth $22.95 million and another $99.27 million to build the Binondo-Intramuros bridge and the Estrella-Pantaleon bridge across the Pasig River in Manila.
The launching ceremonies were held at Malacañan Palace on November 15, with President Duterte and Chinese Premier Li Keqiang witnessing the event.
“These projects indicate China’s understanding and sympathy for the challenges that confront our people as we move forward toward a truly dynamic and inclusive economy,” Dominguez said.
The DOF said the construction of the drug-rehabilitation facilities and the bridges across the Pasig River will be financed purely through the Chinese government’s grant assistance (China Aid).
Dominguez also thanked the Bank of China (BOC) for assisting the Philippines in facilitating the planned panda bond sale in China and in organizing the Philippine Economic Briefing in Shanghai in September to present to investors the economic gains that the Philippines made on Duterte.
“Furthermore, we thank the 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. We also welcome the bank’s efforts in bringing the Philippines’s growth narrative to the Chinese investors as demonstrated in the last Philippine Economic Briefing in Shanghai, and look forward to a strengthened partnership,” he added.
Dominguez signed an underwriting agreement on behalf of the Philippines as issuer for the planned panda bond float in the Chinese market, with the Bank of China Ltd. and Standard Chartered Bank (China) Ltd as lead underwriters.
The proposed transaction involves 1.4-billion renminbi (RMB)-denominated panda bonds in the Chinese market.
Dominguez signed the underwriting with BOC Chairman Chen Siqing in ceremonies held at Malacañan Palace last week.
As lead underwriter, the BOC committed to form an underwriting team that will purchase the panda bonds that the Philippine government will issue, and then resell it to the Chinese market for a profit.
“The panda bond issue will diversify our funding sources and provide benchmarks for other Philippine issuers in the onshore market, particularly at this time that the renminbi is a reserve currency,” National Treasurer Rosalia V. de Leon said.
Earlier, the Bureau of the Treasury (BTr) announced that it would tap the panda market through the issuance of panda bonds estimated at $200 million. The BTr is completing the registration requirements with the Chinese government.
The DOF said the BTr tapped the BOC and Standard Chartered Bank as lead issuers for the $200-million sale exercise.
Panda bonds are RMB-denominated securities from a non-Chinese issuer but sold in the People’s Republic of China.
“The bond issue will also complement the financial support from China for the implementation of critical infrastructure projects,” she added.