PLDT Group raises P5 billion from notes issue

MANILA, Philippines - Philippine Long Distance Telephone Co. (PLDT) and its wholly-owned subsidiary Smart Communications have each executed a P2.5-billion five-year fixed rate notes facility agreement yesterday with a group of institutional lenders, proceeds of which will be used to finance capital expenditures and refinance existing debt obligations.

First Metro Investment Corp. acted as the arranger and bookrunner for both debt deals.

Both PLDT and Smart notes fetched a credit spread of 30 basis points over the five-year benchmark rate, the lowest-ever priced by investors for a peso capital market transaction by a corporate issuer in recent history. The five-year notes were fixed at a yield of 6.8615 percent.

Company officials said despite the strong demand reaching P12 billion, PLDT and Smart kept their original issue size of P2.5 billion each. 

The lenders were a mix of universal, savings, trust and investment banks, and an insurance company.

The PLDT Group’s capital expenditure for this year is estimated at P28.6 billion, or 19 percent of projected 2010 service revenues, as part of its continuing investment in the network to support take-up of broadband, higher voice usage, on top of maintenance capex.

PLDT chairman Manuel V. Pangilinan earlier pointed out that 2010 would be a “bridge year” for the group. “Capital investments would remain on the high side at P28.6 billion as we further expand and improve our infrastructure and platforms, both operationally and strategically,” he said.

Officials explained that capital expenditure is being reoriented towards improving network, looking at ways to bring down cost, and continuing investments in broadband and other innovative platforms to expand average revenue per user (ARPUs).

For its part, Smart said it continues to invest in its cellular and multi-platform broadband networks while upgrading its existing transmission, core and access facilities. Smart’s 3G and HSPA networks now cover 50 percent and 44 percent of the country’s population, respectively

First Metro executive vice president Roberto Juanchito Dispo noted that the strong oversubscription during the book-building affirms the high investor confidence in the prospects of PLDT and Smart.

“The high credit quality of these companies and the precise timing of the issuances enabled the notes to be priced at the lowest end of the range. The closing of these two debt deals in record time of eight business days, is a testament to the strength of the names of PLDT and Smart and a success by any measure,” he added.

Meanwhile, PLDT treasurer and Smart chief financial officer Anabelle Chua took note of the overwhelming response of the investors market to these twin notes issuances and the tight pricing that the market accorded their latest debt transactions.

”PLDT and Smart are indeed pleased that the local debt capital market continues to support strongly the fund-raising activities by the PLDT Group. Our latest notes issuance sets a new benchmark for our domestic financings. The proceeds of the financing will enable the PLDT Group to pursue capital investments in conjunction with its technology roadmap, as we continue to ensure that our subscribers have access to the latest and most cost-effective services,” Chua said.