THE GOVERNMENT plans to be ready for the sale of yuan-denominated bonds by November, said a senior official of the Treasury bureau which is making final regulatory preparations for the Philippines’ maiden foray into China’s debt market.
Deputy Treasurer Erwin D. Sta. Ana said last week that the government is targeting to make the maiden issuance by the early fourth quarter — some time in “October-November” — “depending on the market” which will dictate the best timing for the offer.
“The plan to issue the panda bond is still on the table,” Mr. Sta. Ana told reporters during a press briefing.
“We are finalizing registration requirements with the Chinese government. We have several approvals to get also in the Chinese side, so we are still working on that as well as other internal documentation which we need to coordinate with the BSP (Bangko Sentral ng Pilipinas) and DoJ (Department of Justice).”
The BSP, DoJ, and the Department of Finance form part of an Inter-Agency Committee for Review of Foreign Loan Documents, which is tasked to assess public borrowing plans in offshore markets.
In the next few weeks, Mr. Sta. Ana said that they will be filing a registration with the National Association of Financial Market Institutional Investors, a self-regulatory organization in China which is a requirement for an offering in the mainland.
This will be followed by final approval of the People’s Bank of China.
Mr. Sta. Ana reiterated that the Treasury plans to float panda bonds worth $200 million, which may come in three- to five-year tenors.
Finance Secretary Carlos G. Dominguez III has said members of the government’s economic team will be heading to China on Sept. 28 for a non-deal road show, where they will brief potential Chinese investors on the situation of the Philippine economy in order to attract buyers of the panda bonds.
Mr. Sta. Ana said the Philippines will be looking for the best window within which it can dangle the yuan debt notes based on prevailing market rates, demand, and geopolitical developments that could otherwise shake up sentiment.
“We are looking at pricing: if the current pricing environment is advantageous to us,” the deputy treasurer said.
Market participants expect a fresh rate hike in the United States by December that, in turn, would push up rates elsewhere.
The Philippine government plans to borrow up to P727.64 billion this year, about 15% more than the P631.294-billion initially programmed for 2017 in order to help finance the planned surge in infrastructure spending. A fifth of those loans will be sourced abroad.
In January, the Treasury raised $500 million in new money as it sold dollar bonds to foreign investors, alongside P175 billion from its sale of retail Treasury bonds last April. — Melissa Luz T. Lopez