Converge readies P10-B maiden debt issue

Fiber internet giant Converge ICT Solutions Inc. is selling bonds for the first time to support its aggressive expansion nationwide.

Converge is looking to raise up to P10 billion—P5 billion for the base offer and a P5-billion oversubscription option.

Converge CEO and cofounder Dennis Anthony Uy earlier said the company wanted to “test” the local bond market, adding the sale would be launched in the first quarter of 2022.

In a statement on Tuesday, Converge said the planned debt sale was given the highest rating by credit watcher Philippine Ratings Services Corp. (PhilRatings)

PhilRatings assigned a “PRS Aaa” rating with stable outlook, citing factors such as Converge’s strong cash flow, conservative debt management and “notable expansion in subscriber base and its position as a strong player in the fixed broadband market.”

“Gaining this seal of approval from PhilRatings signals that our debt papers pose minimal credit risk. Our strong liquidity and market position should give confidence to potential investors,” Converge president Maria Grace Uy said in a statement on Tuesday.

Going deeper

Converge will use the offer proceeds to bankroll plans to bring fiber internet to 55 percent of all households in the country by 2023.

The planned transaction marks the company’s return to the capital markets after its P29-billion initial public offering in October last year.

As of end-September, Converge also reported it had standby debt facilities amounting to P23.5 billion.

In a stock exchange filing late Thursday, Converge revealed plans to sell about P20 billion in bonds in several tranches over three years.

The fiber Internet provider is going deeper into underserved areas after completing a P6-billion domestic internet backbone that linked the country’s major islands. As of October this year, Converge had deployed nearly 5.5 million fiber ports, which were ready to be utilized by new customers.

The company is present in 440 municipalities while residential subscribers hit 1.6 million in September, double the comparable figure in 2020.