Globe back offshore; raises $600-M from bonds sale

MANILA, Philippines — Telecommunications giant Globe Telecom Inc. on Friday said it raised $600 million from the issuance of dual-tranche US dollar-denominated bonds, proceeds from which will be used to fund the company's spending plans and pay maturing debts.

In a disclosure to the stock exchange, the Ayala-led telco company said it sold 10-year and 15-year notes at coupon rates of 2.5% and 3%, respectively, during its "successful" return to the offshore debt market after 16 years.

The coupon rate is effectively the interest charged to the money that will be lent by investors in exchange for the bonds. Globe said demand for the debt papers was so high that they fetched "favorable" rates, with the size of the order book 6.5 times bigger than the offering.

The bonds are unrated, meaning a credit rating agency did not assess the securities, and have been applied for listing on the Singapore Exchange Securities Trading Limited.

"The issuance is a testament of the investor community’s unwavering trust in the Company’s strong business fundamentals," Ernest Cu, company president and chief executive, said in a statement.

"The success of the offering, after having last tapped the international capital markets in 2004... enhance our network and deliver on our commitment of providing first-world internet connectivity to the Philippines,” Cu added.

Globe's decision to borrow money from offshore investors anew came following a similar move by its main rival PLDT Inc., which also returned to the debt market last month and raised $600 million from 10- and 30-year debt papers offered to investors at coupon rates of 2.5% and 3.45%, respectively.

The duopoly 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.

“We are extremely delighted with the outcome of our re-entry in accessing the debt capital markets, especially with the speed and execution of the deal team making it one of the fastest unrated bond deals for a corporate," Rizza Maniego-Eala, Globe chief finance officer, said.

"The outstanding success of the transaction underscores global investors’ confidence in Globe’s strong long-term outlook. This issuance was an important milestone in our continuous engagement with investors and expanding our debt capital structure,” Maniego-Eala added.

On Friday, shares in Globe went up 0.58% to end the week at P2,078 each. The main index capped the day in the red.