Tuesday, 17 March 2009

San Miguel Sets Philippine Record With $800 Million Bond Sale

By Cecilia Yap and Clarissa Batino
Bloomberg
http://www.bloomberg.com/apps/news?pid=20601080&sid=aNWHUpyqmDnQ&refer=asia

March 16 (Bloomberg) -- San Miguel Brewery Inc., the Philippines’ biggest beermaker, raised 38.8 billion pesos ($800 million) in a record bond sale by a non-government borrower, four people with knowledge of the matter said.

The Manila-based company priced three-year 8.25 percent notes, five-year 8.875 percent notes and 10-year 10.5 percent bonds to pay about 250 basis points more than similar maturity government debt, said the people, who declined to be identified before an official announcement.

“We thought it would be 25 to 50 basis points higher,” said Rafael Algarra, treasurer at Security Banking Corp. in Manila. “That means the market is actually more inclined on this issue than we thought.”

Debt-free San Miguel Brewery last month said its board approved borrowing as much as 38.8 billion pesos in local currency or dollars to help the company buy land and beer brands from parent San Miguel Corp., which has said it expects to complete the asset sales by April. The brewer, whose profit last year jumped 25 percent to 10 billion pesos, will be buying brands that control 95 percent of the Philippines’ beer market.

Benchmark three-year bonds traded at 5.72 percent today, while five-year debt yielded 6.322 percent and 10-year securities yielded 8.054 percent, according to Philippine Dealing & Exchange Corp.

San Miguel Brewery will pay an extra 250 basis points to 325 basis points over secondary market rates, according to “unofficial pricing guidance” relayed by underwriters to potential investors, the company said on March 3. A basis point is 0.01 percentage point.

Dollar Bonds

President Ramon Ang on March 4 said San Miguel Brewery won’t need to borrow in dollars if the peso sale is subscribed in full. He hasn’t replied to messages from Bloomberg News today seeking comment.

The brewer hired Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Royal Bank of Scotland Group Plc and UBS AG to help it sell about $500 million in bonds, people familiar with the situation said last month.

Banco de Oro Unibank Inc. held the record for a Philippine non-government borrower from its sales of 10 billion pesos in bonds in November 2007 and May 2008, according to data compiled by Bloomberg.

To contact the reporters on this story: Cecilia Yap in Manila at cyap19@bloomberg.net To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net

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