Globe prepares for P10B retail bond issuance

Ayala-led Globe Telecom has started preparations for its planned retail bond issuance before the end of the first semester, as the company looks to tap cheap funds to finance expansion.

Globe said on Monday that it had registered P10 billion worth of retail bonds with the Securities and Exchange Commission (SEC), the country’s corporate regulator.

The securities will be sold in maturities of five and seven years, shorter than the seven and 10-year tenors earlier announced.

Investors may buy the bonds at a minimum of P50,000, which can be increased at increments of  P10,000.

Globe’s bond offering will take care of the remaining funding requirement of the company for its $790-million accelerated capital expenditure program for the next five years. The company hopes to establish the country’s most modern mobile network and address service quality issues experienced by subscribers.

In a statement last week, debt watcher Philippine Rating Services Corp. (PhilRatings) said it had assigned its top “Aaa” grade to Globe’s planned bond sale.

“Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong,” the rating firm said.

PhilRatings said its assessment for Globe reflected the company’s strong, though moderated earnings given keener competition; the company’s well-managed capital structure; strong cash flow generation and adequate liquidity position; strong shareholder support; and the proactive stance of management in addressing the need for improved network quality and reliability.

In 2011, Globe’s consolidated revenue, excluding non-recurring income, amounted to P72.44 billion, 8.73 percent higher than the previous year’s level.

This was achieved on the back of robust growth in service revenue that reached P67.81 billion, up by 8.40 percent year on year from P62.56 billion, driven by the strong take-up for Globe’s customizable postpaid plans and mobile browsing services, and competitive offerings that cater to prepaid subscribers.