Yields for Maynilad’s blue bonds may hit 7.5 Percent

MANILA, Philippines — Maynilad Water Services Inc. (Maynilad)’s P15 billion maiden issuance of blue bonds could yield as much as 7.5 percent per annum, based on the firm’s latest indicative pricing.

Maynilad is set to offer P12-billion fixed-rate blue bonds offering with an oversubscription option of up to P3 billion with tenors of five years and/or 10 years.

Maynilad chief financial officer Ricardo de los Reyes said  the bonds with the five-year tenor have an indicative yield of between 6.798 and 7.0698 percent while the ones with 10-year term have initial rates of 7.1197 percent to 7.5197 percent.

De los Reyes said the possible yield that the investors can get from the blue bonds are lucrative at a time when  the market is expecting interest rates to start going down within the year.

The proceeds from the blue bonds will form part of Maynilad’s record P31 billion capital expenditures (capex) for this year.  

The company expects the net proceeds from the bond offering to be about P11.9 billion of the base offer or about P14.8 billion if the oversubscription option is fully exercised. 

The proceeds of the blue bonds will be used to bankroll 13 identified projects, according to the prospectus.

“Our maiden offering allows us to introduce ourselves as a public investment opportunity,” de los Reyes said in a virtual press briefing yesterday.

The water utility firm, which is the concessionaire of the government for the water services in the West Zone area of Metro Manila, has updated the timetable for its blue bonds offering.

The offer period would now be from June 26 to July 2 from an earlier schedule of May 27 to 31.

The target listing of the bonds at the Philippine Dealing and Exchange Corp. (PDEx) is on July 9. The company earlier scheduled the listing of its issuance at PDEx on June 7.

Maynilad president and CEO Ramoncito Fernandez earlier disclosed that the blue bonds are already oversubscribed based on the reports from the firm’s partner banks for the issuance.

After the blue bonds issuance, the water utility firm would undertake another round of fundraising activities, this time for the remaining P6 billion fund needed for its capex. 

Maynilad borrowed P10 billion from Metropolitan Bank & Trust Co. (Metrobank) earlier this month.

The water utility firm’s capex this year is about 19 percent higher than the P26 billion spent for capital outlay in 2023.