SMIC’s P10B retail bonds fetch 6-6.9% coupon rates

MANILA, Philippines—Publicly listed SM Investments Corp. on Wednesday set the interest rates for its peso-denominated retail bond issue, proceeds from which will be used for the expansion of its office and hotel businesses.

In a disclosure to the Philippine Stock Exchange, the flagship holding firm of tycoon Henry Sy Sr. said those investing in its 7-year “Series C” debt paper would earn an interest rate of 6 percent yearly, while those who would go for the 10-year “Series D” issue would earn 6.9442 percent each year.

“SM will issue P10 billion worth of the Series C and Series D bonds, with an option to issue an additional amount of up to P5 billion,” SMIC said in a statement.

The bonds are scheduled to be offered by SM to investors through underwriters from June 27 to July 6, 2012, and are set to be issued on July 16, 2012.

The new series of SM bonds due 2019 and 2022 is the second peso-denominated bond offering of the company.

The latest SM bonds issue follows its successful P5-billion maiden bond issue in 2009, which was upsized to P10 billion due to strong investor demand.

The firm said that both its 2009 issue and the latest debt paper were rated PRS Aaa by Philippine Rating Services Corp. (PhilRatings), which was the highest rating assigned by the credit watcher.

A PRS Aaa rating denotes that such obligations are of the highest quality with minimal credit risk, and that the issuing company’s capacity to meet its financial commitment on the obligations is extremely strong.

The SM bonds’ joint issue managers and bookrunners are BDO Capital & Investment Corp. and First Metro Investment Corp. (FMIC), while joint lead underwriters are BDO Capital, BPI Capital Corp., China Banking Corp. and FMIC. On top of the lead underwriters, there are seven other participating underwriters for the bond issue.

SMIC is the country’s dominant player in retailing; banking, through Banco de Oro Unibank and China Bank; and shopping mall development via SM Prime Holdings Inc.

It is also a fast-growing player in the residential segment through SM Development Corp., as well as in hotels, leisure estate and convention segment.

The holding firm also has a 17.9-percent stake in mining firm Atlas Consolidated Mining & Development Corp.

Based on its closing price of P710 per share on Wednesday, SMIC had a market capitalization of P435.8 billion at the local stock market.

SMIC grew its net profit last year by 15 percent to P21.2 billion on higher earnings from core banking, retailing, shopping mall and real estate businesses. Consolidated revenue rose by 13 percent to P200.7 billion from a year ago as core businesses reported strong growth.