Globe to issue P10B in retail bonds by June
The Ayala group has lined up another bond offering for the year to take advantage of the country’s highly solvent debt market to access cheap funds.
Globe Telecom, which conglomerate Ayala Corp. co-owns with Singapore Telecom, said Tuesday it would issue P10 billion in retail bonds this June. Earlier this week, affiliate Ayala Land Inc. also announced plans to issue up to P15 billion in retail bonds later this year.
The money to be raised would help bankroll the company’s capital expenditures (capex) budget for the year of $750 million, up from $430 million in 2011.
“That will be it for us,” Globe chief financial officer Alberto de Larrazabal told reporters, saying the bond issue would complete the borrowing requirements for the company’s five-year expansion strategy.
Late last year, the company signed deals with two local banks for a total of P10 billion worth of loans, which were drawn down last January. Globe also recently borrowed $90 million from local lender Chinabank.
The funds are expected to be used for Globe’s five-year, $790-million network modernization and information technology transformation program. About 80 percent of this amount will be spent in 2012 and 2013 while the balance has been earmarked for 2014, 2015 and 2016.
At the company’s annual shareholders’ meeting on Tuesday, Globe chairman Jaime Zobel de Ayala underscored the significance of the network modernization to the company’s plans.
“This will improve revenue prospects for Globe and lower our expenses,” he said.
Globe president and CEO Ernest Cu said the company would have the most modern mobile network in all of Asia after the expansion program is completed.
De Larrazabal said the company was looking at the seven- and 10-year tenors for its planned bond issue. He said finding demand for the bonds would not be a problem given the huge amount of idle funds sitting in the central bank’s special deposit accounts (SDA).
“There is so much money in the market. There’s P1.6 trillion in SDAs,” he said.
