Property giant SM Prime Holdings Inc., a subsidiary of listed conglomerate SM Investments Corp., responded to strong demand by expanding its maiden bond offering to P20 billion from an initial plan to raise P15 billion.
In a statement, SM Prime said P5 billion of the P10 billion oversubscription option was used to meet strong investor demand, particularly from individuals to banks, investment funds, pension funds, insurance companies, and other corporate entities. The P10 billion oversubscription option was apart from the previous P15 billion funds to be raised.
“The strong market response prompted the joint issue managers and joint lead underwriters to exercise the company’s oversubscription option. The offer period for the [SM Prime] bonds opened on August 13 and closed on August 22. The issue date is on September 1,” the company said.
The P20 billion bond offer was also listed on the Philippine Dealing and Exchange Corp. on Monday. The proceeds of the debt sale will be used to partly fund the company’s five-year expansion plan.
The fund raising effort is the “first and largest” of SM Prime to date, according to SM Prime Chief Financial Officer Jeffrey Lim. The net proceeds after listing-related deductions will help finance the company’s expansion, in line with its five-year roadmap.
The bonds will be issued in scripless form in denominations of P20,000 each, and multiples of P10,000 thereafter. It will be listed on state-run Philippine Dealing and Exchange for the secondary market, which will later be traded in denominations of P10,000.
It is divided into three sets: Series A bonds with five years and six months tenor carrying 4.5479 percent to 5.5479 percent interest rates annually; Series B bonds maturing within seven years with 4.8013 percent to 5.8013 percent rates; and Series C bonds to expire 10 years from issue date carrying 5.15 percent to 6.15 interest rates range.
Joint lead underwriters are BDO Capital and Investment Corp., BPI Capital Corp., China Banking Corp., and First Metro Investment Corp.
On August 8, the Securities and Exchange Commission cleared the issuance of the maiden bond offer. The bonds were also rated PRS Aaa by PhilRatings, which is the highest rating for bonds with minimum credit risk.
SM Prime’s five-year plan aims to double its 2013 net income and revenues by spending P400 billion capital expenditures (capex), which will also double existing malls, offices, hotels and other leisure-related developments by December 2018.
To date, SM Prime had already utilized 25 to 30 percent of the P60.9 billion capex allotted this year, in line with the P400 billion capex planned for the five-year blueprint.
SM Prime’s first half net income grew to P9.80 billion from P8.8 billion during the same period in 2013.