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SM Investments board approves long-term dollar bond issue

Posted on October 03, 2012 11:05:04 PM [ BusinessWorld Online ]

SY-LED SM Investments Corp. has moved to issue long-term US dollar bonds in order to refinance old debt and take advantage of a favorable investment climate, the company said in a disclosure to the Philippine Stock Exchange (PSE) yesterday.

“SM Investments announced today (Oct. 3) that its board of directors approved the issuance of seven- and 10-year US dollar bonds,” the disclosure read. “SM appointed Citi, JPMorgan [Chase & Co.] and Deutsche [Bank] as joint underwriters.”

The conglomerate’s board also authorized management to negotiate and finalize the amount, terms, and pricing of the bond issue, depending on market conditions, it added.

Sought for comment, Jose T. Sio, SM Investments executive vice-president and chief finance officer, said proceeds from the bond offer will be used for debt prepayment.

“As part of SM Investments’ debt management, the proceeds will be used to prepay some of our existing debt to lengthen our maturity profile and improve our overall liquidity,” Mr. Sio explained in a text message yesterday.

As of end-June, SM Investments’ liabilities totaled P284.82 million, 25.59% more than the P226.78 million the previous year, a regulatory filing showed.

The company now seeks to exploit a low interest rate environment that is conducive to borrowing, Mr. Sio added. “SM Investments decided to issue the dollar bonds because of lower interest rates and the deeper volume of available funds,” he said. “Also, we want to maintain our visibility in the international market.”

SM Investments was incorporated in 1960 as the holding company of the SM Group, with interests in shopping mall development, retail merchandising, financial services, real estate development and tourism, as well as hotels and conventions, according to information on PSE’s Web site.

The firm had allotted a record P56.8-billion capital budget for this year -- a 20% increase from the previous year -- to fund expansion of its malls and for condominium development units SM Prime Holdings, Inc. and SM Development Corp.

The conglomerate grew its net income by 13.07% to P10.90 billion in the first half from P9.64 billion in the first six months last year, driven by the strong earnings growth of its core residential, banking, and mall operations.

Total revenues climbed 14.35% to P105.2 billion from P92 billion in the same comparative periods, while costs and expenses grew 14.75% to P85.02 billion from P74.09 billion.

SM Investments’ shares gained P20 or 2.70% to P760 yesterday from P740 on Tuesday. -- F. J. G. de la Fuente            

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