In expansion mode: SM gets $500-M funding boost

Sy family-led SM Investments Corp. (SMIC) has raised $500 million from the offshore debt market, marking its largest bond issuance abroad in a decade as the country’s largest conglomerate gears up for aggressive expansion.

In a statement on Thursday, SMIC said the issuance—part of its European medium-term notes (EMTN) program—was 3.2 times oversubscribed, with final demand reaching $1.6 billion.

READ: SM conglomerate returns to offshore bond market

The bonds, which will mature in five years, will be listed on the Singapore Exchange, SMIC added. They were priced to yield 5.466 percent, or 135 basis points above the US treasury benchmark.

These also have a coupon rate of 5.375 percent per year. This represents the annual interest rate that SMIC will pay to lenders.

“Our establishment of the pioneer EMTN program allows us to efficiently access funding with flexibility, especially in times of volatility,” SMIC chair Amando Tetangco Jr. said. “We believe that the positive reception of this maiden issuance is a testament to the investability of quality Philippine corporates.”

EMTNs, which are issued outside the United States and Canada, give issuers the flexibility to tailor their debt issuance to their specific funding requirements and diversify creditor base.

SMIC said 87 percent of the notes were distributed in Asia and 13 percent in Europe, the Middle East and Africa.

By investor type, 83 percent went to fund managers, 11 percent to financial institutions and 6 percent to private banks.

READ: SM Investments raises full-year capex to as much as P115B

The issuance is also SMIC’s largest offering since 2014, when it raised $350 million from an offering of 10-year dollar-denominated bonds.

The conglomerate plans to boost capital spending this year by 44 percent to P115 billion to support expansion in the provinces, which SMIC said could allow more access to modern retailing, financial services and integrated property developments.

Property arm SM Prime Holdings will get the biggest share at P100 billion to fund the launch of four new local malls and 10,000 residential units.

Casino investment plan

Meanwhile, the group’s leisure estate and gaming arm Belle Corp. confirmed that subsidiary Premium Leisure Corp. (PLC) had already applied for a new gaming license.

However, Belle clarified that details of potential investments—specifically whether PLC would develop an integrated casino in Clark—were “still too preliminary at this point, considering that the application has yet to be acted on [by regulators].”

“We will, of course, make the appropriate disclosures once investment decisions have been made firm,” Belle said in a separate disclosure.

PLC exited the local bourse on July 9 after Belle had bought out the gaming investment firm’s minority shareholders.

As a result, Belle now holds 99.95 percent of PLC, whose wholly owned subsidiary Premium Leisure and Amusement Inc. is part of a consortium that holds the gaming license for City of Dreams Manila.