PH firms lock in funds to beat interest rate hikes

Local tycoons are racing to roll out multibillion-peso bond offers to secure cheaper financing ahead of interest rate hikes, banking on strong demand from investors looking for less risky assets.

Two more companies on Tuesday said they would push through with the sale of bonds: Ayala Corp., which is raising up to P15 billion; and Gotianun-led Filinvest Land Inc., which plans to raise as much as P11.9 billion.

Ayala—a property, banking, power and telecoms conglomerate—said it had filed a registration statement with the Securities and Exchange Commission (SEC) to sell three, five and seven-year bonds. The proposed offer size is P10 billion with a P5-billion oversubscription option.

Filinvest Land said in a separate filing its board had approved the sale of P8-billion fixed-rate bonds with maturity periods of three to five years. Another P3.9 billion worth of bonds will be sold in case of excess demand.

The companies have yet to disclose additional details, such as timing and interest rate.

Luis Gerardo Limlingan, managing director at Regina Capital Development, told the Inquirer the offers suggested that companies were deciding to “take advantage of rates while they are low.”

The Bangko Sentral ng Pilipinas is widely expected to raise the benchmark rate from record low level in the second half of 2022, to tamp down rising inflation especially amid global oil price pressures arising from the Russia-Ukraine war.

Investors, too, are flocking to bonds given the lower risk the asset class carries given the uncertain economic environment.

Fiber internet billionaire Dennis Anthony Uy’s Converge ICT Solutions recently completed a P10-billion maiden bond sale, with demand reaching eight times the offer size.

Converge’s five-year bonds will pay an annual gross interest rate of 5.59 percent.

Property giant SM Prime Holdings is in the midst of a maximum of P30-billion debt sale for five, seven and 10-year bonds paying interest rates of 5.61 percent, 6.12 percent and 6.54 percent per annum, respectively.

Megawide Construction Corp. also plans to raise up to P4 billion by selling 3.5 to five-year retail bonds.

Filinvest Land said the latest bond sale was part of its long-term P30-billion bonds registered with the SEC.

The developer’s first tranche of P8.1-billion bond issuance was conducted in Nov. 18, 2020, while another P10 billion was offered last December.

Banks that were hired to manage Filinvest Land’s latest offer were BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., East West Banking Corp., First Metro Investment Corp., RCBC Capital Corp. and SB Capital Investment Corp.

Ayala said the new offer marked the second tranche of its P30-billion long-term bonds registered with the SEC.

The proposed bond issuance received the highest credit rating of “PRS Aaa” from the Philippine Rating Services Corp., suggesting “minimal” credit risk.

The rating likewise signifies that Ayala’s capacity as obligor is “extremely strong.” INQ