Megaworld raises $250M from offshore bond sale

MANILA, Philippines—Property developer Megaworld Corp. has raised $250 million from an offshore bond sale that achieved the lowest yield among any 10-year US dollar corporate bond deal carved out of the Philippines and also marked the cheapest borrowing cost among all unrated issuers in Southeast Asia for such tenor.

Megaworld, which returned to the offshore bond market after two years, priced the 10-year bond issue Wednesday night at 4.25 percent per annum, said Lauro Baja, managing director at investment bank UBS Philippines which acted as the sole bookrunner.

The bond deal was priced at the lower end of the initial guidance range of between 4.25 percent and 4.5 percent, Baja said. Riding on the Philippine government’s newly minted investment-grade status, the issue carried a tight spread of 125 basis points over global Philippine cash bonds ROP and 245 basis points over US Treasury.

The order book was over $500 million, allowing Megaworld to attain such record-low borrowing cost, the bookrunner said.

“The strength of the underlying credit of Megaworld combined with the solid shareholder support from AGI (Alliance Global Group Inc.- Megaworld’s parent conglomerate) allowed them to achieve the lowest ever yield for a 10-year Philippine corporate bond,” Baja said.

Over 40 investors participated in Megaworld’s fund-raising. Of the total deal size, 20 percent was allotted to fund managers, 35 percent to banks, 40 percent to private banks and 5 percent to insurance firms. Investors based in Asia comprised about 98 percent of the bond deal, Baja said.

These fixed-rate bonds due 2023 will be listed on the Singapore Exchange Securities Trading Ltd.

Megaworld has been lengthening the maturity of its offshore bond over the years, taking advantage of investors’ growing comfort with its creditworthiness and well as rising confidence on the Philippines. 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.

The group led by tycoon Andrew Tan comprises foremost 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 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 sqms of residential space and 200,000 sqms 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 around six million sqms.