First Metro investment Corp. (FMIC), the investment banking arm of the Metrobank Group, is expecting to arrange around P125 billion up to P140 billion in financing deals this year, a company official said.
“Debt capital market will remain strong in 2014,” FMIC Senior Vice President Justino Juan Ocampo said, specifying that rates will remain relatively low.
Roberto Juanchito Dispo, president of FMIC, explained that for this year, in terms of capital raising, it will be more attractive for corporations to raise bonds given new tax regulations.
“Pre-financing is also expected as corporations will continue to take advantage of lower rates. Banks are seen to issue Tier 2 to comply with Basel 3 regulations. Equity is also a financing option but it will be challenged by valuation,” Dispo further said.
Ocampo told reporters on Monday that the deals FMIC is looking to arrange this year may go as high as P140 billion, which will be needed to support the capital-raising activities of several companies.
For the first quarter alone, FMIC is looking at P50-billion worth of bond issuances, while it targets to close P60-billion total of power project financing in the first half of the year. Ocampo was referring to two listed power firms and one unlisted company, although he declined to specify the name of the companies.
“For the first quarter of 2014, we will see a healthy firm of pipeline for bond issuances,” Ocampo explained.
“For the first quarter, we estimate a total of around P50 billion in bonds to be issued by corporate. There will be other companies to follow soon this year. Last year, in the first half, corporations prioritized equity than debt. But this time around, given the uncertainty in the market, more companies would look to tap debt given the relatively low rates that we still have right now,” he added.
In 2013, total debt issuances decreased by 20 percent, or approximately P197 billion in 2012 year-on-year, while corporate debt issuances alone increased by P21 billion, or 3 percent.
Ocampo also said that FMIC is expecting to secure P15 billion to P30 billion in initial public offering (IPO) deals.
According to him, the companies that FMIC will help with their IPOs are involved in consumer-related and property businesses.
In the equities market, total capital raised decreased by 20 percent, or P44 billion from P219 billion in 2012 to P175 billion in 2013.
“Equity market will remain a corporate financing option [in 2014]but will be challenged by earnings prospects and valu-ations,” Ocampo said.