Ramon Ang’s SMC mobilizes funding for massive airport push

Tycoon Ramon S. Ang-led San Miguel Corp. (SMC) is mobilizing funding sources to bankroll its massive airport complex in Bulacan.

Ramon Ang
SMC president 

SMC is moving forward to raise up to P20 billion in bonds by June 2024, a regulatory filing on Tuesday showed. 

These will be 6-year and 10-year bonds, which can also be used for refinancing obligations. 

Why this matters?

With a portfolio that spans food, drinks, energy and infrastructure, SMC is one of the country’s biggest conglomerates, with annual revenues over P1 trillion.

It has also taken on massive commitments to develop the country’s badly needed airport infrastructure. 

It recently bagged a P170 billion deal to upgrade and operate Manila’s Ninoy Aquino International Airport, which is the country’s busiest gateway. 

It is also in the midst of building the New Manila International Airport in Bulacan, which anchors a P740 billion aerotropolis in the province just north of Metro Manila. 

How SMC will fund these projects is a key consideration for investors. 

Bond sale in June

Based on the indicative timeline, SMC will set the bond price or interest rate on June 10 this year. 

The formal offer period will run from June 17-21, 2024 before the target listing date on or before June 28. 

Proceeds for Bulacan

SMC said net proceeds of P17.56 billion will be used mainly for the 2,500-hectare Bulacan airport but it can also divert resources to its other projects, such as Naia, within 24 months from the bond listing date.  

As of December last year, overall land development works stood at about 77 percent. 

SMC had indicated a 2026 target to finish this but in a report by the Philippine Star, Ang said he was willing to delay the Bulacan project to focus on the pressing need to fast-track investments in Naia. 

Debt payments

Apart from airport projects, SMC aims to redeploy a portion of the proceeds to partially redeem P30 billion Series 1 bonds issued in 2021. 

Bondholders have the right, but not the obligation, to require SMC to redeem all or part of the bonds on their third anniversary on July 8, 2024.

Analyst take

The Fitch Group’s CreditSights remains positive on SMC despite its heavy push into airports. 

The new Naia project is expected to have a “manageable impact” on the conglomerate’s credit profile. Moreover, the project creates new opportunities for revenue growth and cost synergies. 

Because SMC is expected to shoulder the bulk of the investments for the project, it raises capital spending risks for the group, CreditSights said. 

About the author
Miguel R. Camus
Miguel R. Camus

Miguel R. Camus has been a reporter covering various domestic business topics since 2009.

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