Underwriters for SMC’s P10-B bond offer named

/ 05:35 AM August 24, 2019

Conglomerate San Miguel Corp. (SMC) has mandated four local banks to underwrite a fresh P10-billion bond offering, which has obtained a triple-A rating from local credit watchdog Philippine Rating Services Corp. (PhilRatings).

These are BDO Capital & Investment Corp., China Bank Capital Corp., PNB Capital and Investment Corp. and RCBC Capital Corp., a prospectus submitted to the Securities and Exchange Commission showed.


These banks have committed to underwrite P2.5 billion each.

Aside from paying for maturing obligations, proceeds from the offering may be used to fund the redemption of SMC’s outstanding preferred shares (Series 2B), in the event the conglomerate exercises the option to redeem these preferred shares. The redemption may initially be funded via a bridge loan.


PhilRatings said it had assigned a rating of “PRS Aaa” to this proposed fixed-rate bond issue. It also maintained its rating of “PRS Aaa” for SMC’s P50 billion in outstanding fixed-rate bonds, which are part of its P60-billion three-year debt securities program. The ratings have a “stable” outlook.

“PRS Aaa” is the highest rating assigned by PhilRatings. This suggests that the debt paper is of the highest quality with minimal credit risk. The borrower’s capacity to meet its financial commitment on the obligation is deemed “extremely strong.”

A “stable” outlook, on the other hand, indicates that the rating is likely to be maintained in the next 12 months.

In a statement, PhilRatings said the rating reflected the following key considerations: SMC’s steady cash flow generation that is seen to further strengthen, as proceeds from finished energy and infrastructure projects come in; manageable leverage position, as the progressive completion of capital-intensive projects lessens the need for debt financing, going forward; adequate liquidity and financial flexibility; well-entrenched market leadership and solid track record of subsidiaries, backed by stable demand that is expected to receive a further boost from a growing domestic economy; an experienced management team that provided a large degree of assurance that the SMC group’s aggressive growth strategy will be soundly executed.

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TAGS: BDO Capital & Investment Corp., China Bank Capital Corp., Philippine Rating Services Corp., Philratings, PNB Capital and Investment Corp., RCBC Capital Corp., San Miguel Corp., SMC
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