AGI, Travellers look to refinance dollar debt

TWO COMPANIES led by tycoon Andrew L. Tan will refinance dollar-denominated obligations maturing later this year, a top executive of Alliance Global Group, Inc. (AGI) said.

AGI, the holding firm for Mr. Tan’s businesses, has an outstanding $ 500- million bonds due in August, while Travellers International Hotel Group, Inc., a joint venture between AGI and Malaysia’s Genting Berhad, has a $300 million bond maturing in November, according to regulatory filings.

“Travellers has a bond. We’ll refinance that... with a peso loan. For AGI, we will also refinance that,” AGI President Kingson U. Sian told reporters on the sidelines of the listing ceremony for Megaworld Corp.’s P12- billion fixed-rate bonds on Tuesday.

Sought for more details, AGI Chief Financial Officer Dina D. Inting said in a mobile phone message the conglomerate can issue dollar bonds or “pay it with a dollar loan.”

In explaining its refinancing strategy, Mr. Sian pointed out that AGI has dollar-denominated revenues, while Travellers earns in the local currency.

AGI and Travellers are refinancing their debt at a time when interest rates are on the rise, with the United States Federal Reserve hiking interest rates this month — the second in three months and the third since the 2008 financial crisis. Market players are expecting two more rate increases for the rest of the year.

Both companies went to the offshore debt market in 2010 to fund their huge capital requirements because “at that time, to get that kind of size, you have to go abroad to raise.”

“With liquidity in the market, you can get that locally so we’re raising the bond,” Mr. Sian said, referring to Megaworld’s first bond issue since 2009.

“That’s a testament to the development of the local financial industry especially the banking industry. There’s so much liquidity and the capacity of the banks has grown in size,” Mr. Sian said.

Megaworld, the property development arm of AGI, listed on Tuesday P12 billion worth of Series B fixed rate bonds — up from the base offer size of P8 billion — at the Philippine Dealing and Exchange Corp. The debt was priced at 5.3535% per annum due 2024.

The issue was 2.2 times oversubscribed due to strong demand from a wide spectrum of investors ranging from individuals in the retail market to banks, investment funds, pension funds, insurance companies and other corporates, Megaworld said in a statement.

The offer represents the initial tranche from its P30-billion shelf registration of debt securities, proceeds of which will primarily fi nance its capital expenditures expected to hit P60 billion this year across Megaworld and subsidiaries Empire East Holdings, Inc., Global-Estate Resorts, Inc. and Suntrust Properties, Inc.

Asked for the timing on the sale of another tranche of debt securities, Mr. Sian said: “We’ll see. The interest rates, you have to time that also. The rates are also moving up.”

Shares in AGI lost 16 centavos or 1.24% to end at P12.70 each, Travellers shed four centavos or 1.28% to close at P3.09 apiece, and Megaworld dropped three centavos or 0.87% to settle at P3.48 per share.