PH, Bank of China ink panda bond deal


The government’s plans for a maiden panda bond offering have move forward following the signing of an underwriting deal with the Bank of China.

In a statement on Friday, the Finance department said the agreement, which spells out the terms and conditions of the $200-million offering, had been signed in Malacanang by Finance Secretary Carlos Dominguez 3rd and Bank of China Chairman Chen Siqing.

“As lead underwriter, the Bank of China has 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 department said.

Bank of China will also serve as bookrunner of the panda bond issue.

“We thank the Bank of China (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,” Dominguez was quoted as having said during the signing ceremonies on Wednesday.

“We also welcome the Bank’s efforts in bringing the Philippines’ 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 has said that the issuance of the panda bonds—yuan-denominated bonds sold in China by a non-Chinese issuer—would depend on market conditions, possible business risks and the trend in dollar interest rates.

National Treasurer Rosalia de Leon has also said that the offering would diversify the government’s funding sources and provide benchmarks for other Philippine issuers.

“The bond issue will also complement the financial support from China for the implementation of critical infrastructure projects,” she added.

The signing of the underwriting agreement was witnessed by President Rodrigo Duterte and Chinese Premier Li Keqiang, who was in Manila for the just-concluded Association of Southeast Asian Nations summit.

The Finance department said Dominguez also inked a financing cooperation agreement with Liu Liange, president of the Export-Import Bank of China, covering 85 percent of the costs of the Kaliwa Dam-New Centennial Water Source and Chico River Pump Irrigation projects.

The Finance chief also signed a memorandum of understanding with Fu Ziying, China’s vice commerce minister and international trade representative, to “jointly identify and study” key infrastructure projects for possible Chinese funding.

Rounding off the deals signed that day was a grant agreement for approximately $23 million_to be used for the rehabiliation of Marawi—that was also signed by both Fu and Dominguez.


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