Petron completes P20-billion corporate notes issue

MANILA, Philippines - Petron Corp., the country’s largest oil refining and marketing company, has successfully completed the issuance of P20 billion worth of peso-denominated notes payable in US dollars, the company said yesterday.

The bonds, which carry a tenor of seven years and a coupon of seven percent, were well received as the order books was in excess of P49 billion. Over 70 percent of the orders came from offshore investors.

The successful bond offer followed a series of corporate roadshows in Manila, Singapore, Hong Kong and London.

Petron president Eric Recto said they took advantage of the low interest rate environment and the familiarity of investors with the structure, following the highly successful P44.109-billion ($1 billion) 10-year dollar-yielding peso-denominated notes issued by the Republic of the Philippines last September. 

Recto said they would utilize proceeds from the offering to repay existing indebtedness and for general corporate purposes, including capital expenditures.

“We are proud to be the first Asian corporation to issue this type of notes. This innovative structure allows corporations to access competitiv peso funding offshore, an alternative from the traditional dollar denominated bonds, while diversifying our investor base and removing foreign exchange risks for the company,” he said.

The initial foreign exchange fixing rate was P42.603 to a dollar. The notes were issued at par.

For his part, Petron chairman and CEO Ramon S. Ang said the bond flotation not only boosts the company’s viability but also its creditworthiness.

“We are very pleased with the outcome of our fund-raising exercise,” he said.

Ang said the success of the transaction validates the confidence of both the local and international investment community with Petron’s long-term viability and growth potential, including numerous synergies with the San Miguel Group, its majority owner.

He said the success of their bond float also underscores the positive sentiment of investors in the Philippine economy.

Credit Suisse, Deutsche Bank, HSBC and Standard Chartered were the joint lead managers and bookrunners for the transaction.

Petron set aside P15 billion for its capital expenditure program this year, of which P13.9 billion has already been approved which includes the 70-megawatt power plant, service station and non-fuels business expansion, among others.

The oil firm owns a 180,000-barrels per day refinery in Bataan, the biggest in the country. This refinery produces a full range of  petroleum products that supply nearly 40 percent of the  country’s total fuel requirements.