San Miguel’s P10-B five-year bond offering OKd

Conglomerate San Miguel Corp. (SMC) has received approval from the Securities and Exchange Commission (SEC) to offer to the public P10 billion worth of five-year bonds.

The fixed rate bonds due 2024, which will comprise SMC’s “series H” bonds, were priced to yield 5.55 percent a year, SMC disclosed to the Philippine Stock Exchange (PSE) on Friday.

Following the receipt of permit to sell from the SEC, the conglomerate will proceed with the retail offering of the bonds on Sept. 23 through Sept. 27.

This is the fourth tranche of SMC’s P60-billion shelf registration that was approved by the SEC in 2017.

Net proceeds of the offer may be used either to fund the redemption of the outstanding series 2-B preferred shares of the company or refinance existing loan obligations.

SMC earlier announced the redemption of P6.78 billion worth of preferred shares that were issued seven years ago as part of a landmark capital market deal, a move seen to pare down a costly component of its capital base. This is part of the P80 billion worth of perpetual preferred shares issued in 2012, the largest capital market foray in the PSE to date.

The plan is to redeem all of 90.428 million series 2 preferred shares—series B at P75 per share plus any unpaid dividend by October this year.

SMC has mandated BDO Capital & Investment Corp., China Bank Capital Corp., PNB Capital and Investment Corp. and RCBC Capital Corp. as joint lead underwriters and bookrunners for this offering. Bank of Commerce and BPI Capital Corp. are the selling agents.

The bonds will be listed on fixed income trading platform Philippine Dealing & Exchange Corp. on Oct. 4.

The bonds have been rated “PRS Aaa” with a stable outlook by local credit watchdog Philippine Rating Services Corp. (PhilRatings).

“PRS Aaa” is the highest rating assigned by PhilRatings. This suggests that the debt papers are 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 or to remain unchanged in the next 12 months.