SMC issues $300M perpetual bonds at 6.75% per annum

SMC GLOBAL Power, a leading local power generation firm led by conglomerate San Miguel Corp., has raised $300 million from an issuance of new offshore perpetual bonds.

The perpetual bonds were priced to yield 6.75 percent per annum until 5.5 years, during which the power generation firm will have the option to redeem the securities or otherwise pay a higher rate, banking sources said on Wednesday night.

Investors from Asia gobbled up the lion’s share of the perpetual securities deal at 87 percent, with Europeans taking the remaining 13 percent, parent firm SMC said in a disclosure to the Philippine Stock Exchange on Thursday.

This marks SMC Global Power’s return to the offshore bond market after raising last year $300 million from a 7.5-percent per annum perpetual bonds which are not redeemable until 5.5 years.

For this new issuance, if the bonds are not redeemed by 5.5 years, SMC Global Power will have to pay bond holders 250 basis point more than the original coupon rate.

ANZ, Bank of America Merrill Lynch, DBS Bank Ltd., Deutsche Bank, HSBC, ING, Mizuho Securities and UBS arranged this transaction.

The issuance is a “Regulation S (Reg S) ” US benchmark undated subordinated capital securities, which meant they were sold to global investors outside the United States.

For investors, perpetual securities function like dividend-paying stocks or preferred shares as interest is paid for as long as these are held by investors. They offer a predictable source of income for the holder.

SMC Global Power is the country’s largest independent power company by installed capacity, supplying 22 percent of the Luzon grid and 17 percent of the national grid.