Conglomerate San Miguel Corp. (SMC) has completed a P30-billion fresh domestic bond offering, setting a new record as the largest bond deal carved by a nonbanking institution out of the local debt market.
SMC, which has been an active issuer of corporate bonds in the last 12 years, returned to the local debt market for the first time since the pandemic wreaked havoc on the global economy. Proceeds from the issuance will be used to retire existing dollar-denominated obligations, allowing the firm to curb foreign exchange risks.
The six-year SMC bonds due in 2027, which carry an interest rate of 3.3832 percent per annum, were listed on local fixed-income trading platform Philippine Dealing & Exchange Corp. (PDEx) on Thursday.
“Despite the challenging economic environment, SMC has once again successfully tapped the bond market for its financing needs from our last listing in 2019 [for a P10-billion bond issuance],” SMC chief financial officer Ferdinand Constantino said during the listing ceremony at PDEx.
The latest P30-billion bond issuance carries a put option or potential repricing on the third year and optional redemption on the fourth or fifth year.
‘Jumbo’ bond issuance
PDEx president Antonino Nakpil welcomed the “jumbo” bond issuance by SMC, which he cited as a long-standing and frequent issuer of corporate bonds at PDEx.
With this listing, SMC now has total of P90 billion worth of bonds listed on PDEx, accounting for 6.36 percent of total outstanding corporate bonds in this platform, Nakpil said.
Including bonds issued by SMC subsidiaries, the group’s total listings on PDEx now amounted to P244.47 billion or 17.21 percent of total listed issues, Nakpil said.
He also cited the breadth of investors attracted by the latest issuance, which booked 6,097 bondholders. This level of participation had only been exceeded by SMC’s own subsidiary, SMC Global Power, whose previous bond issuance brought in as many as 6,836 investors, Nakpil noted.
He recalled the SMC group first tapped the local debt market via PDEx in 2009 with the maiden issuance of flagship San Miguel Brewery.
After muted activities in the first half of 2021, Nakpil said SMC’s issuance was a “good kickstart to the second half, when we expect the corporate engines of the economy to start demanding funds as the country emerges further toward the aspired national recovery.”
There are now P1.42 trillion worth of corporate debt instruments listed on PDEx. This year alone, the exchange saw P134.24 billion worth of new bond listings. SMC’s was the 11th bond listing so far this year.
SMC’s latest issuance marked the first tranche of its P50-billion bond shelf registration.