PLDT back offshore with $600-M debt offer amid pandemic
MANILA, Philippines — Telco giant PLDT Inc. chose to return to the international debt market during the pandemic, launching a US dollar-denominated bond offer on Wednesday meant to raise cash to pay debts falling due this year and the next.
In a disclosure to the stock exchange on Wednesday, PLDT said it plans to raise $600 million from 10- and 30-year debt papers to be offered to investors at coupon rates of 2.5% and 3.45%, respectively.
The rate is effectively the interest charged to money that will be lent by investors in exchange for the bonds. PLDT said the rates were the “lowest ever coupon” on debts issued by a local company.
Interest dropped because of strong demand. PLDT said the company received a total of $10.2 billion in tenders for both securities, 17 times bigger than the size of the offering. The company is expected to sell as planned.
“The market's overwhelming welcome only serves to validate PLDT's record of resiliency and patented financial discipline over the years,” Manuel V. Pangilinan, company president and chief executive, was quoted as saying the statement.
Apart from paying maturing debts and prepaying some others, Anabelle Lim-Chua, chief financial officer, said the telco firm would also allot “a portion” of the proceeds to fund capital expenditures, which have been reduced as planned this year by P20 billion to P63 billion due to the pandemic’s disruption.
“We are grateful for the strong support from the international markets which will diversify our liquidity sources and lengthen our maturity profile,” Chua said in the same statement.
PLDT, as well as its rival Globe Telecom Inc., expected a challenging year brought about by movement restrictions to get the coronavirus under control, putting their bottomline at risk. With most expansion plans on hold, financing debts due to be paid this year meant tapping new ones— Globe, for instance, borrowed about P9 billion from banks in March.
For Moody’s Investors Service, a debt watcher, PLDT’s foray abroad helps reduce the pressure of maturing liabilities on its balance sheet. In the first quarter, the telco’s net income dipped 12% year-on-year on the back of large capital investments even as revenues rose 7% annually.
“Nevertheless, we expect leverage will remain elevated at 2.8x-3.0x over the next 12 months as the company continues its heavy capital spending plan, which is at the top end of our tolerance range for the company’s Baa2 rating,” Annalisa Di Chiara, Moody’s senior vice president, said in a statement.
Shares in PLDT were down 0.25% to close at P1,220 each at the local bourse on Wednesday.
Editor's Note: A unit under PLDT's media conglomerate has a majority stake in Philstar Global Corp., which runs Philstar.com. This article was independently produced following editorial guidelines.
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