SMC seeks shelf registration of P 60B in fixed bonds

Conglomerate San Miguel Corp. (SMC) plans to sell as much as P60 billion worth of local debt paper to fund big-ticket projects within the next three years, but half of the amount may be raised sooner rather than later.

In a disclosure to the Philippine Stock Exchange on Tuesday, SMC said it had filed with the Securities and Exchange Commission (SEC) a registration statement and preliminary prospectus for the shelf registration of fixed bonds amounting to P60 billion.

The initial offering of these bonds will have a base size of P25 billion with an option to increase by P5 billion in case of strong demand from the investing public.

As part of the shelf registration program, securities can be registered for an offering that will be made continuously or in tranches within a period of three years. Corporate issuers like SMC can borrower as much as needed and/or when market conditions are favorable.

This suggests that SMC expects to continue to be active in the domestic debt market in the coming years to fund large capital outlays, including those for infrastructure projects.

The last time that SMC tapped the local debt market was in July this year with the issuance of P30 billion worth of bonds due 2027, with an interest rate of 3.3832 percent a year. Proceeds from these were used to settle short-term borrowings that SMC tapped to redeem $516 million worth of notes last April 26.

Last July, SMC also retired ahead of its 2022 maturity a $130-million foreign currency-denominated loans.

The new bond shelf registration will give SMC more room to tap the debt market. In June, the SEC approved the shelf registration of P50 billion worth of SMC local bonds, out of which P30 billion had already been used.

During the nine-month period that ended Sept. 30, the SMC group paid a total of P14.23 billion of its scheduled amortizations and maturing obligations using cash generated from operations, according to its latest financial statement. INQ