ASEAN KEY DESTINATIONS
PHL, Bank of China agree on terms for $200-M Panda bond float
The Philippine government and the Bank of China have agreed on the terms and conditions of the inaugural issue of around 1.4 billion renminbi-denominated Panda bonds in the Chinese market.
Finance Secretary Carlos Dominguez III and Bank of China chairman Chen Siqing signed the underwriting agreement at Malacañang. It was witnessed by President Rodrigo Duterte and Chinese Premier Li Keqiang, the Department of Finance said on Friday.
Panda bonds are renminbi-denominated securities, which could be sold to raise funds for the government.
The Philippine government is the issuer, with the Bank of China as lead underwriter or bookrunner of the Panda bond issue.
The lender will form an underwriting team to purchase the Philippine-issued bonds and then resell the securities to the Chinese market for a profit, the DOF noted.
Dominguez and the Chinese representatives also signed other documents, including one concerning the rehabilitation of Marawi City.
The bond issuance will depend on market conditions, potential business risks, and dollar interest rates trends, Dominguez noted.
National Treasurer Rosalia de Leon said "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.”
Reserve currency is held in large amounts by major financial institutions for international transactions, such as paying off debt obligations.
“The bond issue will also complement the financial support from China for the implementation of critical infrastructure projects,” De Leon added.
Dominguez and other members of Duterte's economic team went to Shanghai, China in September and gave a Philippine Economic Briefing (PEB) "to enable Philippine officials to present to Chinese investors the economic gains that the Philippines has made on the Duterte watch," the DOF said.
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