PLDT raising half of fund need via bond sale

Philippine Long Distance Telephone Co.’s plan to raise more than half of its capital expenditure budget requirement through the sale of mid- and long-term bonds is seen as a good move as it is expected to help the telco better manage its obligations.

PLDT intends to use the proceeds of the bond sale  to fund its capital expenditure and refinance a portion of its existing debt.

“While the debt offering could modestly increase its total outstanding debt in the near term, it will help PLDT term out its debt maturity profile and reduce foreign exchange rate risk,” Moody’s assistant vice president Yoshio Takahashi said.

On Jan. 23, PLDT announced that it had obtained the Securities and Exchange Commission’s approval for its plan to sell bonds with a base offer size of P10 billion and an option for oversubscription of up to P5 billion.

It plans to issue seven-year bonds due 2021 with a yield of 5.2250 percent and 10- year bonds due 2024 with a yield of 5.2813 percent.

At the end of September 2013,  PLDT said about P17.7 billion—or 16 percent of its total reported outstanding debt of P110 billion—would fall due on or before the end of this year.

PLDT plans to use a portion of the bond sale’s proceeds to refinance about 40 percent of its maturing loans in 2014.

With the new bonds, PLDT’s total maturing debt beyond 2018 would increase to more than 40 percent from 30 percent as of the end of September, according to Moody’s estimates.

The refinancing will also help reduce foreign exchange rate risk as the bulk of the debt to be refinanced is denominated in US dollars, Moody’s said.