PLDT raises record $600-M bonds
Telecommunications giant PLDT Inc. has made a triumphant return to the international bond market after nearly two decades of absence as investors swarmed its dollardenominated 10-year and 30-year dual-tranche offering.
The $600-million bond offering becomes the lowest ever coupon for a 10-year and 30year issuance by a Philippine corporation and is also the country’s first ever 30-year offering from a non-government entity.
It garnered an order book of $10.2 billion, which is 17 times over-subscribed. This is the largest orderbook size and oversubscription achieved by any Philippine issuer.
PLDT chairman, president and CEO Manuel V. Pangilinan said the company is “extremely gratified” by the response of the international bond market to its comeback after an 18- year absence.
“For the better part of those years, the road was mostly smooth, but there were bumps along the way which made our journey difficult. I believe we have now assembled possibly the best management team in our history, one that will allow us to realize the extraordinary potential of our business as an integrated telco,” Pangilinan said.
“The market’s overwhelming welcome only serves to validate PLDT’s record of resiliency and patented financial discipline over the years. We are grateful indeed to the two lead banks – Credit Suisse and UBS – for a job well done. We are mindful that our performance in the coming years should match the expectations of the market that received us so warmly,” he said.
PLDT set the terms of a dollar-denominated 10-year and 30-year dual-tranche offering at an aggregate principal amount of $600 million with a fixed coupon of 2.5 percent and 3.45 percent, respectively, payable semiannually.
The bonds were priced at T+180 and T+195 with a reoffer yield of 2.566 percent and 3.495 percent. The order book was allocated predominantly to Asia and the balance to Europe.
PLDT said a successful twostep revision of price guidance allowed the company to tighten pricing by 60 basis points (bps) on the 10-year and 65 bps on the 30-year, which is the largest by any Philippine issuer ever.
“The tremendous market response to our bond offering is beyond what we expected after such a long absence. We are grateful for the strong support from the international markets which will diversify our liquidity sources and lengthen our maturity profile,” PLDT chief financial officer Anabelle Lim-Chua said.
Chua said two thirds or about $400 million of the proceeds would be used to refinance the maturities for the balance of the year, debt maturities next year, and selectively prepay some other debts. She said the balance of about $200 million would be used to fund the company’s capex requirements for this year and next year.
Chua said historical low US interest rates, as well hopes of introducing some diversification to the firm’s total funding and debt portfolio, prompted PLDT’s return to the international bond market.
She said the company also felt that it has a great story to tell, especially given the opportunities which a telco and digital services provider company like PLDT can provide during the current health crisis.
Overall, she said the reception that the company received from investors is not only a vote of confidence for PLDT, but also for the country.
“We were also able to benefit from our absence because there’s an element that because we haven’t been around for such a long time, the interest then became very strong. That is what they call the scarcity value. So because you’re not out there borrowing and issuing all the time, it became quite an investment opportunity for a lot of these investors,” Chua said.
Chua said there are no plans at the moment to conduct an additional bond offering.
“The good thing about this is, in one exercise, we were able to address our refinancing requirements up to next year. So we have more time to plan how we want to sort of tap financial markets after then,” she said.