SMC to offer retail bonds worth P15B

Conglomerate San Miguel Corp. plans to raise up to P15 billion from a new public offering of five-year retail bonds.

This is the second issuance under SMC’s three-year bond shelf registration of up to P60 billion. The first P20 billion worth of bonds were issued on March 1.

Proceeds from the new offering will be used mainly to refinance obligations, SMC president Ramon S. Ang said in a text message.

In a disclosure to the Philippine Stock Exchange on Tuesday , SMC said it had filed with the Securities and Exchange Commission a registration statement for a new offering of at least P10 billion in fixed-rate bonds due 2022, with an option to upsize the offering by P5 billion.

The bonds will be listed and traded through fixed income trading platform Philippine Dealing & Exchange Corp.

Local credit watchdog Philippine Rating Services Corp. (PhilRatings) said it had assigned the highest rating of “PRS Aaa” to the new debt offering of SMC with a “stable” outlook.

Obligations rated “PRS Aaa” are deemed of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is deemed “extremely strong.”

A “stable” outlook, on the other hand, means that the rating was likely to be maintained or to remain unchanged in the next 12 months.

SMC is one of the largest conglomerates in the Philippines with diversified businesses ranging from beverages, food, packaging, fuel and oil, energy and infrastructure. Its traditional businesses include: San Miguel Brewery Inc., the largest beer producer in the country; Ginebra San Miguel Inc., reportedly the world’s largest producer of gin by volume; San Miguel Pure Foods Co. Inc., which offers some of the country’s most recognizable brands including Magnolia, Purefoods, Monterey, Dari Crème, B-Meg and La Pacita.  There is also San Miguel Yamamura Packaging Corp. a leading packaging company that offers total packaging solutions.

New businesses include Petron Corp., the largest integrated oil refining and marketing company in the Philippines and a major player in Malaysia as well as SMC Global Power Holdings Corp., which accounts for 22 percent and 17 percent of the Luzon and national grids, respectively. San Miguel Holdings Corp., on the other hand, is operator and developer of key infrastructure projects, including the South Luzon Expressway (SLEx), the Skyway System, the Southern Tagalog Arterial Road Tollway (STAR), the Tarlac-Pangasinan-La Union Expressway (TPLEx), Naia Expressway (NAIAx) and the Boracay Airport, among others.

“SMC’s management team is well accustomed to the Philippine operating environment, having managed the company through periods of crisis and instability in the Philippines. Most senior managers have been with the company for a considerable amount of time. SMC continues to invest in businesses that have the potential to be leaders in their respective industries. SMC also seeks to diversify into industries that support and ride on the growth and development of the Philippine economy, hence its recent foray into fuel and oil, energy and infrastructure. In addition, SMC consciously identifies and pursues synergies across its different businesses,” Philratings said.

Philratings noted that SMC was planning to spend over P300 billion in the coming years to achieve its target of growing its revenues by half and doubling its earnings before interest, taxes, depreciation and amortization (Ebitda) from 2015 levels by 2020. For 2017, SMC is seen to spend about P80 billion with a significant portion being allocated to power and infrastructure development.