Businesses turn to capital markets for funds

The low interest rate regime—driven by the local central bank’s aggressive monetary easing amid the coronavirus—is encouraging more corporations to issue debt paper to refinance older and costlier debt or fund expansion programs.

The Securities and Exchange Commission (SEC) has approved property developer Filinvest Land Inc.’s (FLI) up to P30 billion worth of fixed-rate bond issuance under shelf registration and Megawide Construction Corp.’s planned perpetual shares offering worth up to P5 billion.

In a meeting on Oct. 27, the SEC en banc also approved Cityland Development Corp.’s planned commercial paper offering of up to P1.4 billion, subject to compliance with certain requirements.

For the first tranche of the offering, FLI will offer up to P9 billion worth of bonds with a tenor of three and 5.5 years. The base offer is P6.75 billion but FLI has the option to increase it by P2.25 billion.

Net proceeds from the offering—amounting to P8.88 billion assuming the full exercise of oversubscription—will be used to refinance FLI’s maturing debt and to fund its capital expenditures and general corporate requirements.

The bonds will be listed and traded on the Philippine Dealing & Exchange Corp.

FLI tapped BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., East West Banking Corp. and SB Capital Investment Corp. as joint lead underwriters and book runners for the offer. First Metro Investment Corp. will serve as colead underwriter.

Megawide, for its part, will offer 30 million nonvoting perpetual series 2 preferred shares, with an oversubscription option of up to 20 million of the preferred shares. The offering price is P100 per share.

The preferred shares will be listed and traded on the main board of the Philippine Stock Exchange.

Assuming the oversubscription option is fully exercised, Megawide expects to generate P4.96 billion in net proceeds, which will be used to partially finance the company’s existing projects, including the Mactan-­Cebu International Airport and Parañaque Integrated Terminal Exchange, as well as the expansion of its precast plant capacity.

Proceeds from Cityland’s offer will be used to partially finance the construction of the company’s projects and pay its maturing debt notes.

Additionally, the SEC has approved Cityland’s request for exemption from the submission of an underwriting agreement for the offer.