SM Prime sets yield rates for retail bonds

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PROPERTY giant SM Prime Holdings Inc. priced its P20-billion retail bond offer it to the public on Wednesday.

In a statement on Thursday, SM Prime said it has set the interest rates for its bond offering.

The peso-denominated Series D bonds will carry a yield rate of 4.5095 percent a year, due in 5.25 years. The 10-year, Series E, on the other hand, has been assigned a yield rate of 4.7990 percent.

Series D and E comprise the P15 billion base offer, while P5 billion has been set aside as “an option.”


The bond offer will run up to November 13. The issue date to bondholders is on November 25.

Proceeds from the bond sale will be used for mall expansion and refinancing of previous loans.

SM Prime has programmed three to five mall openings yearly, and targets a total of 55 malls in the Philippines by the end of the year with a 7.3-million square meter floor area.

Next year, SM Prime is set to open six new malls and expand two existing malls, which will amount to additional mall space of 571,631 sqm. Capital expenditure for 2016, mainly for mall expansion and land acquisitions, is pegged at P70 billion to P85 billion.

“The retail bond to be issued by SM Prime will largely support funding for our mall expansion programs in the coming years. This is a testament to management’s confidence that the economic growth of the Philippines will be sustained over the medium term and will eventually have a positive impact on the provinces as growth spreads to these areas,” SM Prime President Hans T. Sy said.

Philippine Rating Services Corporation (PhilRatings) gave the Series D and E bonds with a rating of PRS Aaa, the highest rating assigned by PhilRatings. A PRS Aaa rating means the securities carry the smallest degree of investment risk.

Joint issue managers and joint bookrunners of the bonds are BDO Capital & Investment Corp., China Banking Corp. and First Metro Investment Corp., which are also acting as joint lead underwriters together with BPI Capital Corp., PNB Capital and Investment Corp., United Coconut Planters Bank, SB Capital Investment Corp., East West Banking Corp., RCBC Capital Corp., Land Bank of the Philippines and Philippine Commercial Capital Inc.

The P20 billion bond issue follows SM Prime’s previous bond offerings, particularly a similar P20-billion bond issue in 2014 with tenors of five and a half years, seven years, and 10 years.

SM Prime is the real estate arm of the Sy family, under umbrella conglomerate SM Investments Corp. (SMIC). Sy also has business interests in banking (BDO Unibank Inc.) and retail (SM Retail Inc.), with affiliates such as China Banking Corp. and casino and entertainment firms Belle Corp. and Premium Leisure Corp.

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