Tycoon Andrew Tan-led property developer Megaworld Corp. has raised $250 million through an offshore bond sale that achieved the lowest yield among 10-year dollar corporate bond deals carved out of the Philippines and cheapest borrowing of this tenor among unrated issues in Southeast Asia.
Megaworld, which returned to the offshore bond market after two years, priced the 10-year bond issue on Wednesday night at 4.25 percent a year, said Lauro Baja, managing director at investment bank UBS Philippines, the deal’s sole bookrunner.
The bond deal was priced at the lower end of the initial guidance range of 4.25 percent to 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 exceeded $500 million, allowing Megaworld to attain such a 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.
More than 40 investors participated in Megaworld’s fundraising. Of the total deal size, 20 percent was earmarked for fund managers, 35 percent for banks, 40 percent for private banks and 5 percent for insurance firms. Investors based in Asia accounted for about 98 percent of the bond deal, Baja said.
These fixed-rate bonds due 2023 will be listed on the Singapore Exchange.
Megaworld has been lengthening the maturity of its offshore bond issues over the years, taking advantage of the investors’ confidence in its credit worthiness and in 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 Megaworld group is composed of high-end property brand Megaworld and its affiliates, Empire East Land Holdings and Suntrust Properties, that 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 expanded 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 been one of the country’s leading real estate companies, completing more than 240 residential and office buildings with a total floor area of about 6 million sqms.