Megaworld to issue 10-year bonds in offshore market

Tycoon Andrew Tan-led property developer Megaworld Corp. is returning to the offshore bond market after two years with an offering of 10-year dollar-denominated debt paper to be listed on the Singapore exchange.

In a disclosure to the Philippine Stock Exchange Wednesday, Megaworld announced plans to issue a new batch of fixed-rate bonds that will mature in 2023. Megaworld has been lengthening the maturity of its offshore bonds over the years, taking advantage of investors’ growing comfort with its credit-worthiness as well as rising confidence on the Philippines.

Investment bank UBS AG was mandated as sole bookrunner for the new debt issuance. The size of the planned offering was not yet indicated.

“Proceeds of the issue will be used by the company for general corporate purposes,” the disclosure said. The Megaworld group expects a record capex spending of P35 billion this 2013, reflecting its bullish outlook on the market. The group plans to launch more than 10 new projects in the first half of the year.

The fresh fund-raising plan was unveiled after the Philippine government recently bagged a much-coveted investment grade rating from Fitch Ratings, which is expected to benefit all Philippine issuers in the form of cheaper borrowing costs.

The last time Megaworld braved the offshore debt market was in 2011 when it raised $200 million from the sale of seven-year bonds at a coupon rate of 6.75 percent. In the 2011 fund-raising, Megaworld—an unrated issuer in the overseas debt market—benefited from oversubscription even without having to conduct a road show. Prior to that, Megaworld tapped the offshore bond market in July 2006 with a $100-million, five-year debt issue.

The Megaworld group comprises high-end property brand Megaworld and its associates Empire East Land Holdings and Suntrust Properties, which focus on medium-cost and affordable housing, respectively. The group sold more than P63.5 billion in residential projects in 2012, translating into a total saleable area of more than 550,000 square meters, a 71-percent growth from its performance in 2011.

Megaworld is a pioneering developer of integrated live-work-play-learn township communities in the Philippines. In Metro Manila, these townships include Eastwood City in Quezon City, Newport City in Pasay City, and McKinley Hill, McKinley West and Uptown Bonifacio in Taguig City. Each of these projects will offer at least 500,000 square meters of residential space and 200,000 sqm of BPO office space. The developer has also extended its reach to the Visayas with its ongoing township projects such as The Mactan Newtown in Cebu and Iloilo Business Park in Iloilo.

For more than 20 years, the group has emerged as one of the country’s leading real estate companies, completing more than 240 residential and office buildings with a total floor area of about six million sqm.