Meralco raises P3B via fixed rate notes issuance

Manila Electric Co., the country’s biggest power distributor, has raised P3 billion from the sale of long-term debt papers to selected institutional investors.

Proceeds from the fixed-rate note facility, which was arranged by First Metro Investment Corp., will be used to fund Meralco’s capital expenditure program for this year.

In a disclosure to the Philippine Stock Exchange, Meralco announced strong market reception to its issuance of P1 billion worth of fixed rate seven-year notes, which were priced to yield 5.5346 percent a year, and P2 billion worth of fixed rate 10-year notes with a yield of 5.6387 percent a year.

Demand for the debt paper exceeded offering size as a mix of universal, savings, trust and investment banks, investment funds and insurance companies participated.

Meralco president and chief executive officer Manuel V. Pangilinan expressed his appreciation to the investors for their strong support and overwhelming response as reflected in the tight pricing received by the company’s latest fund-raising activity.

The offering was launched on Dec. 16, 2011, and completed in less than three weeks, said FMIC president Roberto Juanchito T. Dispo.

“The Meralco notes were well received by the market with an oversubscription over the planned issue size of P3 billion,” Dispo said.

For this year, Meralco targets to earmark about P10 billion for its capex program.

Oscar S. Reyes, senior executive vice president and chief operating officer of Meralco, earlier said the bulk of the amount would be used for electric capital projects such as substation facilities, transformers and distribution lines.

This move, according to Reyes, will ensure that Meralco will continue to have a strong distribution system despite the expected increase in the power load over the next few years.

Last year, Meralco allocated P9 billion for its capex spending, which saw the construction of new distribution lines to address critically loaded distribution circuits, conversion of odd-voltage systems to the standard 34.5 kilovolt distribution system, improvement of switching flexibility of distribution feeders and replacement of defective power transformers.