SMIC bond offering draws foreign investors

SM Investments Corp. (SMIC) launched and priced a five- year convertible bond offering that drew “high quality” investors from across Asia and Europe.

In a disclosure to the Philippine Stock Exchange, the Sy-led holding firm said that the $250-million convertible bond offering is the first issuance of a Philippine company this year.

The bonds feature a coupon of 1.625 percent and yield to maturity of 2.875 percent per annum with a conversion premium of 20 percent.

“This landmark transaction provides SMIC with attractive, low cost financing, while achieving a conversion price at a premium to the current share price,” SMIC said.

The transaction, SM’S second in its corporate history after its maiden issuance in 2007, was offered in a RegS format and was structured as an accelerated bookbuild.

Funds generated from the overseas sale will be used for general corporate purposes and the refinancing of existing debt.

Citigroup and JP Morgan were the joint bookrunners of the issue.

In November, the SM Group announced a capital expenditure budget of P56.8 billion this year, 32.3 percent higher than the previous year’s P43 billion, underscoring its commitment to expand despite concerns of a global economic growth slowdown.

In the first nine months, SMIC’S consolidated net income grew 13.6 percent to P14.17 billion from P12.48 billion in the same period last year.

Among SM’S core businesses, the banking group contributed the most to earnings at 31.3 percent. Retail and shopping malls accounted for 28.1 percent and 23 percent, respectively. SM’S real property business added 17.6 percent.

Consolidated revenues, on the other hand, grew by 13 percent to P140.10 billion from P124.34 billion in 2010.

Shares in SMIC, which expects its net income and revenues on a consolidated basis to rise 14 percent, fell 26 points or 3.84 percent to P651 each on Friday from P677 apiece on Thursday.