SM Prime to issue bonds

The Securities and Exchange Commission (SEC) has approved a bond offering worth as much as P60 billion under a shelf registration program planned by SM Prime Holdings, now the most valuable company in the local stock market.

The first tranche of the offering is worth up to P10 billion, proceeds from which will be used to fund capital expenditures, particularly in the commercial and hotel operations, according to documents from the Securities and Exchange Commission.

The base offer is worth P5 billion but SM Prime has the option to upsize the offering by another P5 billion in case of strong demand.

Shelf registration allows an issuer to register and sell under the same prospectus and other regulatory filing requirements a certain volume of securities that the issuer does not intend to use up right away. The SEC gives the issuer a three-year window to use up the shelf registration.

Such shelf registration is crucial in finding a good timing to proceed with a planned securities issuance especially when financial markets are volatile. This allows the issuer to complete all the tedious paperwork and thereby lay the groundwork for a future issuance and immediately go to market as soon as conditions are favorable.

SM Prime, a leading property firm in Southeast Asia in terms of market capitalization, has committed to earmark P60 billion for capital outlays annually for the next three years to achieve its development roadmap that aims to double profits by 2018. The group is also continuing its expansion in China and evaluating opportunities elsewhere in the Southeast Asian region. To date, SMPH has received proposals to be part of integrated property developments across the region.

The Sy family-led property firm has set a goal of doubling net income to P32 billion by 2018.

As of Monday’s close, SM Prime is valued by the stock market at P794.18 billion, the highest market capitalization among all companies listed on the Philippine Stock Exchange. Parent conglomerate SM Investments Corp. follows closely with P792.6 billion.