Meralco raises P5 B from notes issue

MANILA, Philippines - Power retailing giant Manila Electric Co. (Meralco) has raised P5 billion from the issuance of fixed rate corporate notes, which was more than twice oversubscribed.

In a statement issued yesterday, Meralco said proceeds from the issue will be used to fund capital expenditures and for general corporate purposes.

The notes issue was 2.35 times oversubscribed from the original announced issue size of P3 billion with books reaching P7.05 billion in orders, thus allowing Meralco to exercise its oversubscription option of P2 billion.

The fixed rate facility agreement consists of a P500 million seven-year note and a P4.5-billion 10-year note due in 2018 and 2021, respectively.

The seven-year and 10-year notes were fixed at a yield of 6.26 percent and 6.89 percent, respectively. The notes fetched a credit spread of 20 and 21.12 basis points over the relevant respective seven-year and 10-year benchmark rates, which is the lowest priced by the investor market for a peso capital market transaction by a corporate issuer in recent history.

The oversubscription and tight price demonstrate investor confidence in Meralco’s strength and leadership. The leaders were a mix of universal, savings, trust and investment banks, investment funds and insurance companies.

Hong Kong and Shanghai Banking Corp. Ltd. Trust Department was the lead arranger and HSBC was lead manager.

At the same time, Meralco announced that its board board approved an investment in Redondo Peninsula Energy Inc.or RP Energy, through wholly-owned unit Meralco Powergen Corp.. RP Energy has the development rights and asset to two 300-megawatt (MW) coal-fired power plant in the Subic Bay Freeport Zone.

Meralco is the largest electric power distribution company in the Philippines with a franchise service area covering 9,337 square kilometers, encompassing 31 cities and 80 municipalities in and around Metro manila. Its franchise area contributes about 46 percent of the country’s gross domestic production.