SMIC launches P20-B bond offer
SM Investments Corp. (SMIC), the country’s leading conglomerate, launched on Friday a seven-year retail bond offering worth up to P20 billion, marking the group’s fourth foray into the local bond market.
The seven-year bond offering was priced at 5.159 percent a year, SMIC said in a statement on Friday.
The base offering is worth P15 billion but SMIC has the option to increase the offering by up to P5 billion. The offering will run from Nov. 25 through Dec. 2 this year. Issuance date is Dec. 9.
This series of SMIC bonds due 2023 is the fourth offering by SMIC of peso-denominated retail bonds to the public.
Similar to its previous bond floats, the SMIC “series G” bonds were rated “PRS Aaa” by local credit watcher Philippine Rating Services Corp. (Philratings).
Based on Philratings’ scale, “PRS Aaa” is the highest rating. This is assigned to long-term debt securities with the smallest degree of investment risk. This rating denotes that SMIC’s capacity to meet its financial commitment is “extremely strong.”
SMIC bonds’ joint issue managers for this offering are BDO Capital & Investment Corp. and China Bank Capital Corp., which are also acting as joint lead underwriters and joint bookrunners with BPI Capital Corp. and First Metro Investment Corp. SB Capital Investment Corp. is a co-lead underwriter for the bond issue.
Outside of its core banking (BDO Unibank and China Bank), property (SM Prime Holdings) and retailing businesses (SM Retail), SMIC has interests in mining (Atlas Consolidated Mining) and community mall development (as an investor in DoubleDragon Properties’ flagship subsidiary, CityMall Commercial Centers Inc.).
In the first nine months of 2016, SMIC booked an 11-percent growth in net profit to P22 billion as a fast-growing economy boosted earnings across its retail, banking and property businesses.
Excluding one-off items, core profit rose by 9 percent year-on-year during the first nine months, matching the 9 percent rise in consolidated revenues to P252.4 billion for the period.
According to Philratings, its rating reflected SMIC’s “solid financial profile, backed by strong liquidity and a sound capital structure; its focused growth, supported by strong synergies between SMIC’s businesses and its well-qualified management; its core companies with very strong market position, sustained earnings, and recurring cash flows; and the beneficial impact of the strong growth of the domestic economy on the industries of SMIC’s core businesses.”
The credit watchdog noted that liquidity had remained strong, with positive operating cash flows in the last three years under review (2013-2015) and the first half of 2016. As of end-June 30, ending cash and cash equivalents of P29.5 billion amply covered outstanding short-term debt of P13.4 billion.
