Ang-led San Miguel Corporation kicked off on Tuesday, June 18, 2024, the offering of up to P20 billion in fixed-rate retail bonds after receiving the approval of the Securities and Exchange Commission last June 14.
In a disclosure to the Philippine Stock Exchange, the diversified conglomerate said the SEC has issued the Permit to Sell and Offer Securities for the retail bond offering consisting of a base offer of P15 billion and an oversubscription option of up to P5 billion.
The offer period is ongoing until June 24, 2024, or on such other dates and time as may be agreed in writing among SMC and the Joint Issue Managers, and the Joint Lead Underwriters and Bookrunners.
The offer bonds comprise 6.5-year Series O Bonds due 2031, with a fixed initial interest rate of 7.2584 percent per annum, and 10-year Series P Bonds due 2034, with a fixed initial interest rate of 7.7197 percent per annum.
The offer bonds will be issued as the second and final tranche of the Company’s P50 billion fixed rate bonds shelf registered with the SEC effective June 21, 2021. The effectivity of the shelf registration has been extended until July 21, 2024 by the SEC.
The retail bonds will be issued on July 3, 2024, and will be listed in the Philippine Dealing & Exchange Corp. on the same date.
SMC plans to allocate over P17 billion of the net proceeds towards investments and related projects for its Bulacan airport project. Additionally, funds will be used to redeem the bonds issued in July 2021.
SMC’s upcoming bond issuance has been assigned the highest PRS Aaa, with a Stable Outlook, Issue Credit Rating by the Philippine Rating Services Corporation (PhilRatings).
PhilRatings said in a statement that it also maintained its Issue Credit Rating of PRS Aaa, with a Stable Outlook, for the Company’s outstanding rated bonds of P142.9 billion.
Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment to the obligation is extremely strong. A Stable Outlook means the rating will likely remain unchanged in the next 12 months.
PhilRatings said the assigned issue ratings considered SMC’s diversified portfolio that includes market-leading businesses, solid leadership, healthy profitability driven by the continuous recovery of major businesses, and adequate liquidity supported by stable cash flow generation.
In 2023, SMC’s consolidated net income significantly recovered by 67 percent, amounting to P44.7 billion. The recovery was mainly backed by significant volume growth in its key business segments.
“The continuing strong performance of SMC’s business segments is seen to bolster the expansion in consolidated sales moving forward. Net income will likewise be on an uptrend, although an expected uptick in costs would temper such growth,” said PhilRatings.
While price inflation, a weak peso, and high interest rates are anticipated to persist in the medium term, SMC’s margins are expected to be stable as the Company actively implements initiatives to control and reduce costs, and which are seen to benefit SMC more in the long run.
PhilRatings said SMC continues to have ample flexibility to service its obligations comfortably. Projected cash from operations is expected to be positive and upward, backed by a steady increase in earnings.
Investing activities, mostly for plant, property, and equipment, as well as intangible assets, will be primarily funded by internally-generated cash. Debt maturities will be paid from a mix of internally-generated cash and refinancing.