• Rising borrowing costs are starting to alter fundraising plans of major Philippine corporations.
• SM Prime deferred a planned P18-billion bond sale despite holding P35.4 billion in cash and a strong balance sheet.
• There's growing concern that the US-Iran conflict could keep interest rates elevated and make debt financing more expensive.
The Sy family-backed SM Prime Holdings pushed back plans for a bond sale worth as much as P18 billion as rising borrowing costs ripple through financial markets, underscoring the impact of the US-Iran war on domestic corporate strategy.
The property giant said on Wednesday it had decided to postpone until further notice its fourth tranche bond offering worth up to P12 billion, with an oversubscription option of up to P6 billion, citing “current market conditions.”
The planned issuance consisted of Series AE bonds due in 2032 and Series AF bonds due in 2036.
An industry source said the real estate group reassessed its borrowing plans due to rising interest rates.
Rates move higher
SM Prime is a regular bond market issuer, last issuing notes in November 2025 carrying coupon rates of 5.9 percent to 6.28 percent.
Rising rates were exemplified by the June 2, 2026 listing of Filinvest Land bonds, which carried a coupon rate of 7.399 percent.
Corporate bond rates are usually priced above benchmark government securities, with the spread varying depending on market conditions and perceived risk.
This also comes as the Bangko Sentral ng Pilipinas warned it may need to raise interest rates further should the Middle East conflict trigger a sustained increase in oil prices and inflation.
Strong balance sheet
SM Prime entered 2026 from a position of strength, with cash climbing 28 percent to P35.4 billion and short-term debt falling to P83.1 billion during the first three months of the year.
The company also held P1.11 trillion in assets backed by roughly P478 billion in equity.
SM Prime president and CEO Jeffrey Lim earlier said capital spending this year could be cut to about P100 billion given challenging market conditions.
SM Prime also has the option to tap its $3-billion euro medium-term note program after raising $350 million last year.
The deferred retail bonds would have been the fourth tranche under its P100-billion bond program filed with the SEC.
Recurring income supports earnings
SM Prime posted flat first-quarter 2026 earnings of P11.66 billion as higher costs offset modest revenue growth.
Revenues rose 2 percent to P33.3 billion, supported by an 8 percent increase in rental income to P21.6 billion that helped cushion weaker real estate sales.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
