SMC to issue P10-B bonds

MANILA, Philippines — San Miguel Corp. is raising funds anew to pay off existing obligations. 

SMC filed yesterday a registration statement with the Securities and Exchange Commission (SEC) for its planned P10 billion fixed rate bond offering due 2024. 

Net proceeds of the offer may be used either to fund the redemption of the outstanding Series 2B preferred shares of the company or refinance existing loan obligations.

Data from the company showed that SMC would need P6.8 billion to fund the redemption of the outstanding Series 2B preferred shares and P3 billion for the refinancing of short-term peso loans and other re-denomination of other existing loan obligations of the company.

The bonds will be issued from the remaining balance of SMC’s P60 billion fixed rate bonds under the Securities and Exchange Commission’s shelf registration facility.

According to the prospectus, the offer is targeted to run from Sept. 23-27 with the issue date set on Oct. 4.

SMC tapped local banks BDO Capital & Investment Corp., China Bank Capital Corp., PNB Capital and Investment Corp. and RCBC Capital Corp. as underwriters.

Philippine Rating Services Corp. has assigned a rating of PRS Aaa to SMC’s proposed P10 billion bond offering.  It likewise maintained its rating of PRS Aaa for SMC’s outstanding P50 billion in fixed-rate bonds.  

 Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong. PRS Aaa is the highest rating assigned by PhilRatings.

 Among the factors considered by Philratings in issuing the rating are SMC’s steady cash flow generation that is seen to further strengthen, as proceeds from finished energy and infrastructure projects come in, and manageable leverage position as the progressive completion of capital-intensive projects lessens the need for debt financing.

Philratings also considered SMC’s adequate liquidity and financial flexibility, well-entrenched market leadership and solid track record of subsidiaries, backed by stable demand that is expected to receive a further boost from a growing domestic economy and its experienced management team, which provides a large degree of assurance that the SMC Group’s aggressive growth strategy will be soundly executed.  

The country’s most diversified conglomerate, SMC has investments in beer, food, power, packaging, infrastructure, cement, oil, refining and banking.