San Miguel Corporation, Philippines' largest company will sell bonds to retail investors. The company targets to cut its dollar-denominated debt and protect its earnings from weak peso.
The multi sectors company plans to borrow more in pesos and sell its shares to refinance its dollar-denominated debt. It also plans to fund infrastructure projects from railways, power stations, ports and toll roads by selling its bonds to retail investors, rather than big institutions.
Other Philippine companies such as Globe Telecom Inc. and Filinvest Land Inc. have also started to sell companies' bonds to retail market. Philippine government also began to sell governments' bonds. San Miguel Corporation aim to tap Philippines' growing prosperity and flush liquidity from call-center revenue and overseas remittances.
Chief Finance Officer Ferdinand Constantino told Bloomberg on Friday, "The retail bond market is very liquid." Therefore bond is more attractive than bank loans for fundraising or refinancing.
The company had $8.54 billion debt in dollar-denominated at the end of September. While its total liabilities is accounted at 855.8 billion pesos ($18 billion). Therefore, San Miguel plan to cut half of its dollar debts within the next two to three years.
San Miguel Corporation is the largest food, beverage and packaging public company in Southeast Asia, and the largest corporation in the Philippines. The company has 17,000 employees in over 100 major facilities throughout Asia-Pacific. The company expanded its operation to oil and gas sector in 2008, obtaining 51% shares of Petron Corporation.
Owner of San Miguel beer also extend its business to infrastructure, power plant and property. The company is also a major shareholder of Bank of Commerce, one of the largest lender in the Philippines.
A few years ago, San Miguel engaged in a conversation with Malaysian's CIMB Group Holdings Bhd, Japan's Mizuho Financial Group Inc. to sell its shares in Bank of Commerce. However, last week the company planned to keep the bank in the company's portfolio and injecting 6 billion pesos ($126 million).
"We are never going to sell," CEO Ramond Ang told Reuters regarding San Miguel shares in the Bank of Commerce. "We can be a minority shareholder if someone can put money in and manage it."
The Manila Bulletin reported that San Miguel currently owns 60% of Bank of Commerce, which ranked 17th in the Philippines by its assets. San Miguel aims to grow the bank through its application for a universal banking license which would allow it to offer investment banking services.
San Miguel Corporation, the Philippines' largest company is aiming to protect its earnings and to cut dollar-denominated debt. It also plans to keep banking as one of its portfolio in the Bank of Commerce.
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