SMC raises $800 M via overseas bond issue

MANILA, Philippines—San Miguel Corp. has raised $800 million from a 10-year overseas bond sale, setting a new record as the largest US dollar-denominated corporate bond issue carved out of the Philippines.

The bonds were priced at 4.875 percent per annum.  In a disclosure to the Philippine Stock Exchange, SMC said its return to the overseas bond market was warmly received by the market, thus allowing the issuer to reduce its borrowing cost from the initial guidance rate of 5.125 percent per annum.

SMC has the option to redeem these bonds starting the fifth year.

The final orderbook amounted to $4.5 billion across 250 accounts, the disclosure said, adding the issuance was oversubscribed by 5.6 times the base offer size.

Asian investors took up majority of the bond deal, accounting for 69 percent. European account took 28 percent and the remaining 3 percent was taken up by US offshore investors.

By investor type, 49 percent was gobbled up by private banks, 26 percent by asset managers, 12 percent by banks, 6 percent by insurance firms and 7 percent by other corporations.

This offering marked SMC’s inaugural drawdown of its newly established $2-billion euro medium-term notes (EMTN) program.

ANZ and Standard Chartered Bank were the joint arrangers of the EMTN program. ANZ, BofA Merrill Lynch, DBS Bank, Deutsche Bank and Stanchard Chartered Bank acted as joint lead managers and joint bookrunners for the transaction.

The EMTN program is a medium-term foreign currency funding facility that gives issuers flexibility to issue foreign currency-denominated notes in the international capital markets. These are offered on a continuing basis rather than a one-time deal like a bond issue, thus making it easier for an issuer to tap offshore capital markets. The issuer maintains a standardized document and usually sells through preselected buyers.

This type of debt program allows the issuer to have stable cash flows coming in from its debt issuance, allowing the company to customize borrowings to better match its financing needs. This borrowing tack also allows a company to register with the SEC only once, instead of every time, for differing maturities.

Proceeds from the issuance are intended to be used by the SMC group for general working capital purposes as well as for refinancing, including the repayment of a bridge facility arranged by Deutsche Bank and Standard Chartered Bank.