SMIC to tap dollar bond mart

MANILA, Philippines - Fresh from the success of its $150 million top-up offering, SM Investments Corp. (SMIC) said it is planning on another fund-raising program, this time by tapping into the US dollar bond market.

In a disclosure to the Philippine Stock Exchange yesterday, SMIC said its board approved the issuance of seven- and 10-year dollar bonds.

It has appointed Citi, JP Morgan and Deutsche Bank as joint underwriters for the proposed issue.

Jose T. Sio, chief finance officer of SMIC, said the amount, terms and pricing of the bond issue are still being drawn up and are subject to prevailing market conditions.

He said the company wants to take advantage of predominantly “low interest rates and the significant volume of available funds.”

He said SMIC also wants to “increase its visibility in international markets.”

Proceeds from the planned bond issuance will be used to prepay some of the company’s debt to further lengthen its debt profile.

In August, SMIC sold 9.1 million shares to institutional investors at P700 each. The issue, arranged by Macquarie Capital (Singapore) Pte. Ltd., comes just seven months after SMIC sold $250 million worth of convertible bonds.

The deal was well oversubscribed, attracting around 50 investors.

SMIC shares have grown more than 20 percent so far this year, hitting a high of P760 each.

The stock rose to its 52-week high of P765 yesterday prior to closing at P760 or an increase of 2.7 percent from Tuesday’s close.

SMIC’s leading position in several businesses, including retail and banking, makes it a diversified play on the local economy as a whole.

From the first ShoeMart store which opened in 1958, the SM Group has since evolved into a group of companies with five core businesses: shopping mall development and management (SM Prime), retail (SM Department Stores, SM Supermarkets, SM Hypermarkets and SaveMore stores), financial services (BDO Unibank Inc. and China Banking Corp.), real estate development and tourism (SM Land Inc., SM Development Corp., Costa Del Hamilo Inc. and Highlands Prime Inc.), and hotels and conventions (SM Hotels, SMX Convention Specialists, Hotel Specialists – Tagaytay, Cebu and Pico).

SMIC jacked up its first half profit 13 percent to P10.9 billion as revenues expanded 14 percent to P105.2 billion.

The banks accounted for the lion’s share of aggregate earnings with a 30.9 percent share while retail operations contributed 28.2 percent to total. Malls came in third with 24.2 percent, followed by property development with 16.7 percent.