FDC, SMC make their way to attractive bond market

Despite a string of global and local headwinds, the cash-awash local financial market remains a fertile ground for big corporations looking to borrow for their refinancing and business expansion requirements.

Gotianun-led Filinvest Development Corp. (FDC) filed an application with the Securities and Exchange Commission (SEC) to offer to the public up to P15 billion worth of five- and seven-year bonds on Jan. 20.

Conglomerate San Miguel Corp. (SMC), for its part, plans to raise over a three-year period as much as P60 billion from an offering of commercial papers—referring to debt paper maturing within one year. A registration statement was filed at the SEC dated Feb. 6.

The debt offerings planned by FDC and SMC are both rated triple-A or “PRS Aaa” by local credit watcher Philippine Rating Services Corp. (Philratings).

PRS Aaa, the highest in Philratings’ scale, suggests the securities are of the highest quality with minimal credit risk. The borrower’s capacity to meet its financial commitment on the obligation is also deemed extremely strong.

In the case of FDC, the planned base offering size is P8 billion, but there will be an oversubscription option of as much as P7 billion. The offering will consist of five-year bonds due 2025 and seven-year bonds due 2027, which will be listed and traded on local fixed-income trading platform Philippine Dealing & Exchange Corp. (PDEx).

The lead underwriters and bookrunners for FDC’s offering are BDO Capital & Investment Corp., BPI Capital Corp., Chinabank Capital, Eastwest Bank and First Metro Investment Corp.

Based on the registration statement, proceeds will be mostly used by FDC for the refinancing of US dollar bonds due March 2020 while some will cover working capital.

For its part, SMC will initially offer P15 billion worth of commercial papers, with an oversubscription option of P5 billion. These commercial papers will also be listed and traded on the PDEx.

The arrangers and joint lead underwriters for SMC’s offering are: BDO Capital, BPI Capital, China Bank Capital and SB Capital Investment Corp. The sole issue manager is Philippine Commercial Capital Inc.

The commercial papers will be issued in scripless form in minimum denominations of P50,000 each and multiples of P10,000 thereafter.

The proceeds will be used by SMC to fund the redemption of outstanding series 1 preferred shares.