Del Monte plans P7.5-B bond offer to refinance debt

Published August 13, 2020, 1:47 PM

by James A. Loyola

Del Monte Philippines, Inc. (DMPI) is planning to raise up to P7.5 billion from the issuance of fixed-rate bonds to refinance existing debt obligations and fund other corporate requirements.

Philippine Rating Services Corporation (PhilRatings) said in a statement that, DMPI is planning a P5 billion issuance with an Oversubscription Option of up to P2.5 billion.

The ratings firm has assigned the DMPI bonds with its highest Issue Credit Rating of PRS Aaa, with a Stable Outlook.

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.

PhilRatings said the rating and outlook reflect the firm’s healthy cash flow generation; strong brand equity and market leadership in food and beverage categories; and its diversified products and markets.

It also noted the relatively stable outlook for the food and beverage industry despite the COVID-19 pandemic as these are seen as basic and essential goods; the firm’s sustained profit performance; and manageable liquidity and debt position.

DMPI holds the biggest market share in the packaged pineapple and mixed fruit, canned and ready-to-drink juices, and tomato sauce and spaghetti sauce categories. DMPI is also into the sale of fresh fruits, largely for export.

The Company holds the rights to the Del Monte trademark for the Philippines for processed products. Also offered in its portfolio are products under the brands of S&W, Contadina and Today’s.

Having a presence in the domestic and international markets allows DMPI to balance the performance and corresponding risks of one market versus the other.

PhilRatings noted that, while various businesses have been affected by the coronavirus outbreak and the prevailing community quarantine, opportunities remain for food and beverage companies like DMPI as food and beverage are classified as basic and essential goods. Filipino families continue to spend a significant amount of their income on food.