SM Prime plans to offer P20B in retail bonds

Property giant SM Prime Holdings Inc. plans to offer to the public up to P20 billion worth of retail bonds that will mature in seven years.

In a statement on Tuesday, SM Prime said it had filed with the Securities and Exchange Commission an application for a permit to sell fixed-rate bonds with a base offer of P15 billion due in 2024, with an option to increase allotment by P5 billion in case of strong demand.

The proposed issuance is part of SM Prime’s P60-billion shelf registration of fixed rate bonds approved by the SEC in July last year.

Out of this three-year shelf registration, SM Prime had issued P10 billion in 10-year retail bonds at 4.2005 percent a year last year.

Under the shelf registration program allowed by the SEC, 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.

The proposed bond offering of as much as P20 billion has obtained a triple-A credit rating from local credit watchdog Philippine Rating Services Corp. (Philratings).

In Philratings’ rating scale, obligations rated “Aaa” are deemed of the highest quality with minimal credit risk. It also suggests that the borrower’s capacity to meet its financial commitment is “extremely strong.”

Philratings said the rating reflected SMPH’s “strong’ financial profile, “solid” brand equity and very good operational track record; well diversified portfolio and continuous aggressive construction and expansion of development projects, leading to a significant growth going forward.

As of end-2016, SMPH operated 60 malls in the Philippines, with a total gross floor area of 7.66 million square meters.

This year, SMPH is set to open the following malls: SM Luna Tuguegarao; SM Puerto Princesa; SM Cherry-Antipolo; and SM Cagayan de Oro.

All these are expected to be completed between March and August 2017.

SMPH’s income attributable to equity holders of the parent stood at P23.8 billion in 2016. Consolidated revenues amounted to P79.8 billion last year.