San Miguel readies P20-B bond offer | Inquirer Business

San Miguel readies P20-B bond offer

/ 12:14 AM December 24, 2016

Conglomerate San Miguel Corp. is preparing to launch a new bond offer worth as much as P20 billion to boost funds to trim foreign currency-denominated debt.

The proposed new bond offering is part of SMC’s application for the shelf registration at the Securities and Exchange Commission of up to P60 billion in retail bonds.


SMC disclosed to the Philippine Stock Exchange Friday that it had received from the SEC the official notice on its filing for an initial offering of at least P15 billion with an option to increase the offering by as much as P5 billion.

The bonds are proposed to be listed on the fixed income exchange Philippine Dealing and Exchange Corp.


Under the SEC-sanctioned shelf registration program, securities to be issued in tranches may be registered for an offering to be made on a continuous or delayed basis for a period not exceeding three years.

The issuer is allowed to use the same prospectus for various tranches of securities offering under such mechanism.

Such shelf registration is crucial in seeking a good timing to proceed with a planned securities issuance especially when financial markets are volatile. This allows the issuer to complete all the tedious paperwork and thereby lay the groundwork for a future issuance and immediately go to market as soon as conditions are favorable.

From its stable core food, packaging and beverage businesses, the 126-year-old San Miguel conglomerate embarked on a diversification program in 2007 and has since expanded to higher-yielding industries like energy, fuel and oil, infrastructure and banking.

SMC booked a 54-percent year-on-year growth in recurring net profit to P31.1 billion in the first nine months, buoyed by higher earnings across its food, beverage, power generation and oil businesses. Including extraordinary items, SMC’s net income surged by 125 percent year-on-year to P43 billion for the nine-month period.

Earlier this year, SMC sold its telecommunication assets to PLDT Inc. and Globe Telecom, giving up an earlier bid to compete in this business.

SMC’s operating income reached P73.2 billion, 24-percent higher year-on-year as core beverage, food and packaging businesses maintained their growth momentum. The power and infrastructure businesses likewise delivered higher contributions while fuel and oil subsidiary Petron Corp. booked higher refining margin.


The bonds will be used to partially refinance loans provided by various local banks to SMC to prepay a portion of its dollar-denominated debt.

Local creditwatcher Philippine Rating Services Corp. has assigned a rating of “PRS Aaa” on SMC’s proposed offering, suggesting that the bonds are “of the highest quality with minimal credit risk” and that the borrower’s capacity to meet its financial commitment was “extremely strong.”

The rating was assigned by Philratings given the following key considerations: ample cash flow generation that is seen to strengthen further as SMC’s energy and infrastructure projects are completed; manageable and improving debt position, especially considering the capital-intensive nature of its recent projects in energy and infrastructure; adequate liquidity and financial flexibility, and solid market position and substantial track record of its subsidiaries.

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TAGS: bond offer, Business, economy, News, San Miguel
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