Megawide Construction Corp. | FILE PHOTO
Megawide Construction Corp. has raised P5 billion from the debt market to fund new projects in the pipeline as lenders took advantage of potentially big yields ahead of a projected interest rate cut.
In a stock exchange filing on Thursday, the infrastructure firm led by tycoon Edgar Saavedra said its fixed-rate bond offering was 1.6 times oversubscribed from the base amount of P5 billion.
The offer, which ran from June 28 to July 4, consisted of Series C bonds due in three years, Series D bonds due in five years, and Series E bonds due in seven years, with an average rate of 7.86 percent, according to Megawide.
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RCBC Capital Corp., SB Capital Investment Corp., and PNB Capital and Investment Corp. were the joint issue managers, lead underwriters and bookrunners for the issuance.
“The successful outcome of the bond offering is a vote of confidence in our ability to get back on our feet and sustain our growth momentum as we deliver on our existing and upcoming projects,” Jez dela Cruz, Megawide chief financial officer, said in a statement.
At the same time, Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., explained that the high demand was due to “fixed-income investors trying to lock in generous yield amid growing expectations of monetary policy easing in the coming months.”
“As interest rates decline, future bond issuances are likely to have lower coupons, so recent high-yielding bonds have seen a lot of demand,” Colet said in a Viber message.
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The Bangko Sentral ng Pilipinas has been giving hints of an interest rate cut in August due to easing inflation.
Earlier, Megawide said it planned to spend up to P3 billion this year to fund expansion plans and beef up the portfolio of its growing property arm.
A total of P1 billion will be used for the expansion of “transit-centric developments,” including transport terminals that will connect commuters to the Parañaque Integrated Terminal Exchange.
The remaining P2 billion, meanwhile, will be used for pipeline projects of PH1 Developers Inc., Megawide’s real estate arm, and the ongoing redevelopment of subsidiary Cebu2World Development Inc.’s facility in Cebu City.
Megawide reversed its losses in the first quarter, netting P183.4 million as revenues rose by 19 percent to P5.2 billion. —Meg J. Adonis