THE GOKONGWEIS’ JG SUMmit Holdings Inc. raised P9 billion from a recent retail offering of five-year domestic bonds at a tight spread over comparative government securities.

The five-year bonds will be dated Nov. 19 and carry an annual yield of 8.25 percent. They were priced at a spread of about 175-180 basis points over comparative government bonds traded in the secondary market, JG Summit senior vice president Bach Johann Sebastian told the Inquirer yesterday.

Banking sources said the issuance was upsized from the original offering of P5 billion due to a continuing strong demand for retail bonds from the cash-rich domestic financial market.

The yield was seen as very reasonable for JG Summit as it was at par with the yield carried by the most recent bond offering by its property unit Robinsons Land Corp.

“That’s a very good rate considering it’s a holding firm,” a banking source said. Holding firms usually end up paying a higher price than operating units as the market usually favors debt paper backed by direct cash flow rather than equitized earnings from subsidiaries, the source explained.

Asked why JG Summit did not increase the issuance to the maximum size of P10 billion it was allowed by the Securities and Exchange Commission, Sebastian explained: “We were more conscious on the cost. We could have raised P10 billion but it might have required us to give a higher yield and we wanted to keep our costs tight.”

ING Bank N.V. and SB Capital Investment Corp. acted as the joint issue managers of the issue, with the proceeds to be used by JG Summit to support the capital expenditure requirements of its subsidiaries and for “general corporate purposes.” Doris C. Dumlao