Thursday, 17 September 2009

SM Investments sets $500-M bond issuance, biggest since 1997

Miguel R. Camus
Business Mirror
http://www.businessmirror.com.ph/home/companies/16093-sm-investments-sets-500-m-bond-issuance-biggest-since-1997.html

THE listed holding company of retail tycoon Henry Sy Sr. announced on Wednesday the completion of its $500 million bond issuance, said to be the largest of its kind in over a decade.

In a disclosure to the stock exchange, SM Investments Corp. (SMIC) said the five-year bonds will carry a fixed rate of 6 percent per annum.

“This is the largest US dollar bond since 1997, with the lowest coupon rate to be issued by a Philippine corporate,” said SMIC in a statement.

The firm added that the issue marks the first successful Philippine firm that has capitalized on the reopening of the region’s debt capital markets. Barclays Capital and Citi were the joint lead managers and bookrunners for the issue.

“Strong offshore and onshore bids resulted in an oversubscribed issue, supporting the message that the market is open for Asian borrowers with strong credit and a compelling story,” added the conglomerate.

SMIC said the funds generated from the overseas sale will be used to fund general corporate purposes and refinancing maturing obligations. This includes the refinancing of its $300 million convertible bonds issued in 2007, said SMIC vice president Cora Guidote.

The company added that the strong uptake by investors in the issuance may be a sign that global economic conditions have begun to turn around, a year after the crisis officially started with the collapse of US investment bank Lehman Brothers Holdings Inc.

“There is reason for us to be more optimistic on near-term prospects now that the global economy appears to be stabilizing and recovering from the recent financial shake up,” said SMIC president Harley Sy in a statement.

In June, SMIC successfully raised P10 billion from its retail bond issue, marking the company’s initial foray into the domestic market. The bond offering was also rated triple “A” by rating agency Philippine Ratings Services Corp.

SMIC, one of the country’s largest and most profitable conglomerates, is engaged in five main businesses namely shopping mall development and management, retail merchandising, financial services, real-estate development, and the recently added hotels and entertainment division.

The group also expects to exceed its profit targets for the full year, earlier estimated at 12-percent growth over the P14-billion net income reported in 2008.

In the first six months of the year, SMIC said its net income grew 14 percent to P7.4 billion.

This came on the back of higher revenues which rose 12.4 percent to P74 billion resulting in an improvement in net margin from 9.8 percent the previous year to 10 percent in 2009.

“We’re positive that we can sustain this kind of profit growth for the rest of the year,” said Jose Sio, SMIC executive vice president, in an earlier interview, explaining that the company normally sees an acceleration in spending during the second half of the year.

SMIC’s main businesses also benefit from overseas remittances, which account for a third of the firm’s revenues.

In addition, cash flow margins as measured by earnings before interest, taxes, depreciation and amortization also improved to 21.5 percent from 19.2 percent in the January-to-June period last year.

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