Encouraged by low interest rates, Globe Telecom is issuing P10 billion worth of bonds to fund its expansion this year.
Globe’s P4.5 billion in five-year and P5.5 billion in seven-year bonds will be listed on the Philippine Dealing and Exchange Corp. (PDEx) on June 1.
“We look forward to listing our latest retail bond issue with PDEx. This will allow our investors to enjoy increased liquidity and transparency as they are able to see the best market prices,” Globe chief financial officer Alberto de Larrazabal said.
He said the company would use the proceeds from the bond sale to help fund the ongoing network modernization and IT transformation program, as well as other funding needs for the year.
The five and seven year bonds have coupon rates of 5.75 percent and 6 percent, respectively.
Globe’s bond offer received an “Aaa” grade from local debt watcher Philippine Rating Services Corp. (PhilRatings), “representing the highest rating available with the smallest degree of investment risk.”
Globe ended the first quarter of 2012 with what the company described as manageable levels of debt.
At the end of March, Globe had a gross debt to equity ratio of 1.09:1 and a gross to ebitda (earnings before income tax, depreciation and amortization) at 1.48:1.
Both ratios were well within the company’s debt covenants of 2:1 and 3:1, respectively.
Globe’s net income fell 10 percent to P2.7 billion in the first quarter of 2012 as the company ramped up investments in its network and intensified marketing efforts amid stiff competition.
Globe said service revenue rose by 6 percent year on year to P20.2 billion in the first quarter.
Its mobile revenue rose by 6 percent year on year from P15.6 billion to about P16.6 billion in January to March this year despite intense competition and continued price pressures.
Broadband revenue was also up 13 percent year on year from P1.8 billion to P2 billion in the first quarter.