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Petron raises $250M from perpetual bond issue

Petroleum refiner’s debt notes oversubscribed, says HSBC

By: Amy R. Remo, March 7th, 2013 11:21 PM

Petron Corp., the country’s largest oil refiner and retailer, has successfully raised another $250 million from the issuance of perpetual bonds, following the reopening of its $500-million capital securities that were issued last month.

This brings the total size to $750 million, said to be the country’s largest offshore perpetual bond issue, said HSBC in a statement issued Thursday.

According to HSBC, orderbooks were oversubscribed within 30 minutes of announcement, with total books amounting to $2.5 billion from more than 150 accounts.

The strong orderbook allowed Petron to price the hybrid capital notes at 6.551 percent a year.

HSBC, together with Deutsche Bank, Standard Chartered and UBS, acted as the joint bookrunners and joint lead managers for the sale of perpetual bonds.

The transaction was executed against a strong market, with positive sentiment buoyed on the back of the Dow Jones touching a record high the previous day in the United States.

“The hybrids of Petron have been performing well compared to its peers in the secondary market. A tap of the hybrids made sense for both investors who are looking for more Petron exposure, and for the issuer, to raise cost-effective funding to support its Refinery Mastery Plan,” said HSBC Philippines president and CEO Wick Veloso.

“The yield achieved by Petron with the re-opening was significantly tighter than the original offering, reflecting the fact that the original transaction was well placed and well absorbed into the market,” Veloso added.

Meanwhile, in a separate disclosure to the Philippine Stock Exchange, Petron reported that it priced its offering Wednesday night and slated the issue date on March 11.

Petron chair Ramon S. Ang earlier said in a text message that the proceeds from the new issuance would be used for the company’s expansion program.

For this year, Petron has earmarked P51.9 billion for its consolidated capital expenditures, as it consolidates its hold on the local and Malaysian oil markets.

Of the planned capital spending, 72 percent or P37.37 billion would be allocated for the implementation of the Refinery Master Plan 2 (RMP-2), which is aimed at upgrading the oil firm’s 180,000-barrel-per-day refinery in Limay, Bataan.

Another 13 percent or P6.75 billion will be used for the company’s cogeneration power plant project, which will generate 140 megawatts by 2014.

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