San Miguel Corp, Aboitiz Equity get approval to sell bonds

Billionaire Ramon Ang-led San Miguel Corp. (SMC) and Aboitiz Equity Ventures Inc. are lining up bond offers worth as much as P80 billion in a bid to tap demand for debt instruments during a period of rising interest rates.

The Securities and Exchange Commission said on Friday it approved the planned bond offerings of the two conglomerates during a meeting on Nov. 17.

SMC, a food, drinks, power and infrastructure group, is raising as much as P60 billion, composed  of a P40-billion base offer and an overallotment option of P20 billion.

Aboitiz Equity, which is into power, banking, food, property and infrastructure, is raising up to P20 billion.

April Lynn Tan, chief equity strategist at stockbrokerage house COL Financial Group Inc., expected strong demand from investors.

“Yields of these bonds are high so that should make them attractive, especially since most are expecting [interest] rates to peak soon,” Tan said in a text message to the Inquirer.

Large banks were also ready to support business expansion with loans given the recent downtrend in the stock market.

“If we look at banks’ loans to deposit ratios, they are awash with cash,” Tan explained.

SMC returns to bond market after power subsidiary, SMC Global Power Holdings, raised P40 billion from a record sale in July.

SMC is offering bonds maturing in 2028, 2029 and 2032. The indicative rates for each tranche were 7.68-8.18 percent, 8.1-8.6 percent, and 8.68-9.18 percent, respectively, according to a banking source.

The target offer period is expected to run from Nov. 25 through Dec. 6 this year.

SMC expects to raise a net amount of P58.65 billion, assuming the oversubscription option was fully sold, according to the SEC.

“Proceeds will be used for the optional and final redemption of certain securities of the company, as well as the refinancing of certain dollar-denominated obligations and peso-denominated facilities,” the corporate regulator added.

Aboitiz Equity is raising up to P20 billion to partly finance the acquisition of the Mactan Cebu International Airport concession, marking its entry into the airport business, and to refinance debts.

The Aboitiz family conglomerate earlier struck a P2- billion deal to acquire the air gateway fromtycoon Edgar Saavedra’s Megawide Construction Corp. and India’s GMR Infrastructure.

The venture earlier redeveloped the Cebu Airport and turned it into a world-class gateway after winning the Public Private Partnership project in 2014.

Philippine Dealing and Exchange Corp. CEO Antonino Nakpil said bond listings in October breached the P400 billion mark. This compares with the P213 billion bond in bond listings that recorded last year.

SMC hired BDO Capital & Investment Corp., China Bank Capital Corp., PNB Capital and Investment Corp., Bank of Commerce, BPI Capital Corp., SB Capital Investment Corp., RCBC Capital Corp., Asia United Bank Corp., and Philippine Commercial Capital, Inc. as the joint lead underwriters and bookrunners for the bond sale.

Aboitiz Equity has tapped BDO Capital, BPI Capital, China Bank Capital, and First Metro Investment Corp. as the joint issue managers, joint lead underwriters, and joint bookrunners for the offer.