SMIC raises $500 M from offshore bond offer

MANILA, Philippines - SM Investments Corp. (SMIC) raised $500 million from a recently completed offshore bond offering that has attracted $3.1 billion worth of bids from institutional and private banking investors.

In a disclosure to the Philippine Stock Exchange yesterday, SMIC said it priced the seven-year bonds at a fixed rate of 4.25 percent per annum.

SMIC said the landmark bond issue, which was several times oversubscribed, was priced with one of the lowest ever coupon for a seven-year fixed rate bond issued by a Philippine corporate.

The bonds were sold to investors within the Philippines and across Asia and Europe.

“We would like to thank the investors for giving us their continued support. This exercise is also our way of maintaining our presence in the bond market and fostering a sustainable relationship with the international investment community,” said SMIC executive vice-president and chief financial officer Jose T. Sio.

The bond issue is a debt management exercise which will further lengthen SMIC’s debt profile and take advantage of the much improved interest rate environment, the company said.

The bond issue was handled by Citi, Deutsche Bank and J.P. Morgan as joint lead managers and joint underwriters.

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

From the first ShoeMart store which opened in 1958, the SM Group under holding firm SMIC – 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 by 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 the total. Malls came in third with 24.2 percent, followed by property development with 16.7 percent.