Government defers plan to issue panda bonds

MANILA, Philippines — The government has postponed its plan to tap the Chinese bond market this month due to the widening spread of the coronavirus disease 2019 (COVID-19), according to the Bureau of the Treasury.

In an interview, National Treasurer Rosalia De Leon said the BTr has postponed its plans to issue panda bonds until the situation due to COVID-19 contagion improves.

“For now, there’s none (plans) yet. It was supposed to be in March. We are also marking the panda market development so I think we are not seeing any panda issuance at this time, obviously because of COVID-19,” De Leon said.

Nevertheless, the BTr is not yet fully discounting the possibility of tapping the panda bond market this year.

“We’re saying that (it’s delayed) until the first half of the year,” she said, adding that the Treasury would need to monitor market developments in China.

Should it not push through at all, De Leon also said there may be opportunities to tap other markets, or to focus on domestic borrowings instead.

“There would be opportunities for other markets to be able to make up for possible take-up from the panda issuance. Also, we should not discount the onshore market which you see is very liquid,” the BTr chief said.

On the other hand, De Leon said the Philippines is retaining its plans to issue dollar-denominated global bonds and yen-denominated samurai bonds this year.

“The plan is still there. About $1 billion to $1.5 billion can be sourced from the dollar market and another $1 billion from the samurai market,” De Leon said.

Still, De Leon said there is a need for the BTr to monitor developments to determine the timing of these issuances, given the impact of the COVID-19 outbreak.

Meanwhile, De Leon said some adjustments could be made in the national government’s borrowing program, given COVID-19’s implications on its fiscal condition.

“There could be some adjustments in the borrowing program but it would not be very huge,” she said.

Earlier, both the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) said their collections may take a hit due to the coronavirus outbreak.

But De Leon said the BTr would still need to monitor the performance of revenue agencies, and see if they would be able to catch up in the second half.