SMIC's 5-year notes issue raised to P7B

MANILA, Philippines –  SM Investments Corp. (SMIC), the listed flagship firm of retail tycoon Henry Sy Sr., has jacked up the maximum amount of five-year corporate notes it intends to issue to P7 billion.

In a disclosure to the Philippine Stock Exchange yesterday, SMIC said the rate is fixed at 50 basis points above the Philippine Dealing System Treasury Reference Rate. The notes will be available via a private placement to institutional lenders.

The issue is part of SMIC’s debt management as most of the proceeds will be used to refinance an existing liability worth approximately P4.3 billion, which will mature in 2012. The balance will be utilized for other corporate requirements.

ING Bank N.V. is the lead manager and sole bookrunner for the issue targeted this month.

SMIC earlier accepted $196.6 million in aggregate principal amount of existing bonds ($350 million due 2013 and $500 million due in 2014) to be swapped for dollar-denominated bonds maturing in 2017, which will carry a fixed coupon rate of 5.5 percent per year.

On top of the $213.7 million in bonds to be issued for the swap, SMIC agreed to issue additional seven-year bonds to new investors worth $186.3 million.

The offshore bond transaction was the first to be carried out by a Philippine corporation, which was 6.7 times oversubscribed.

SMIC has set a capital expenditure program of nearly P50 billion this year, up 22.9 percent from the P40.6 billion budgeted in 2010, as it aims to take advantage of a booming property market and steady inflows from Filipinos working/residing overseas.

Around P20.6 billion of this year’s total capex will be used to bankroll the group’s residential and office development projects while another P20.1 billion will go to the expansion of its mall business here and in China.

About P4.8 billion has been set aside for the establishment of more department stores, supermarkets and hypermarkets.

For its banking operations, the group is spending P3.4 billion to continue growing its presence in the industry.

The balance of P1 billion will be used to build new hotels, including its entry into the budget or mid-cost lodging business. By the first half of 2011, the group expects to have a total of 814 hotel rooms from only 260. This would comprise 260 rooms from Tagaytay-based Taal Hotel, Raddison Blu Hotel in Cebu (400 rooms) and Pico Sands in Nasugbu, Batangas (154 rooms).