British Columbia and Philippines Issues to Further Grow the Panda Bond Market

The Province of British Columbia (Aaa/AAA/AAA) successfully completed its second Panda bond offering yesterday with a RMB 1 billion 3-year issue priced at par to yield 4.8%. This compares with their debut transaction in January 2016 when RMB 3 billion in 3-years was priced at a 2.95% yield. The renminbi bonds were offered to both onshore and offshore institutional investors in China’s interbank bond market, and ultimately over 30% was said to have been placed to the latter via Bond Connect, the platform which gives offshore investors direct access to China’s interbank bond market Hong Kong

Separately, the Philippines is planning to issue its first panda bond in the size of RMB 1.4 billion, as witnessed by Chinese Premier Li Keqiang and Philippines President Rodrigo Duterte in a signing ceremony on 15 November where 14 agreements were signed, including the panda bonds underwriting agreement signed by Finance Secretary Carlos Dominguez III and BoC chairman Chen Siqing. The issuance of Panda bonds is a milestone for the two countries in terms of capital markets co-operation, and the Philippine government believes issuing in this market will diversify funding sources, provide benchmarks for other Philippine issuers in the China onshore market – particularly at this time that the Renminbi is a reserve currency, and complement financial support from China for the implementation of critical infrastructure projects.