San Miguel Brewery lists P17B in bonds at PDEx

Beer-maker San Miguel Brewery listed on Monday P17 billion worth of long-term retail bonds on the fixed income exchange Philippine Dealing and Exchange Corp. (PDEx).

The newly listed bonds form part of the P20 billion in fixed-rate bonds recently sold by SMB that, in turn, marked its second foray into the local bond market following the landmark P38.3 billion in bonds issued three years ago.

Listed on PDEx were P10 billion worth of seven-year bonds and P7 billion worth of 10-year bonds. The bonds due in 2019 (series E) were issued at 5.93 percent a year and the bonds due in 2022 (series F) at 6.6 percent. The listing gives retail holders of SMB bonds the option to trade their bond holdings and generate liquidity without waiting for the bonds to mature.

The issue manager for the bond issue was ING Bank NV. The joint lead managers were BDO Capital and Investment Corp., HSBC Ltd., ING Bank, SB Capital Investment Corp. and Standard Chartered Bank.

SMB also issued P3 billion worth of five-year (series D) bonds at 6.05 percent a year but these were not listed yesterday alongside the seven-year and 10-year bonds. One of the bankers involved in the bond underwriting said these would be listed at a future date.

“The system in PDEx is unable to list odd periods since the [five-year tenor] is actually five years and one day. As such, the five year will be listed on the first coupon payment,” the banker explained.

Bulk of SMB’s bonds carried a seven-year tenor as this emerged as the “sweet spot” among investors, which was why the cost of borrowing at this maturity was lower than if SMB were to borrow more of the five-year bonds. Bankers said demand for seven-year debt paper was high as this tenor was lacking in many institutional investors’ portfolio relative to the abundance of five- and 10-year paper.

SMB first debuted on the local bond market in 2009 with the issuance of P38.8 billion worth of retail bonds, the single biggest bond deal out of the local market. A P13.6-billion tranche of the bond issue, however, is maturing this April, which SMB seeks to refinance using part of the proceeds from the latest bond float. The remainder will be used to help pay ahead of maturity a $300-million creditor term facility.

The beer unit of San Miguel Corp. grew its net profit last year by 17 percent to P12 billion on the back of higher volume and selling prices.