The issuance will be made under its $3-billion Euro Medium Term Note (EMTN) program, which was established early last year with parent firm SM Investments Corp.
The company has hired HSBC, J.P. Morgan, Standard Chartered, and UBS as joint lead managers and bookrunners, with BDO Capital and Chinabank Capital as domestic managers, to hold investor calls starting September 8.
SM Investments, the family’s flagship conglomerate, already tapped the EMTN program in July with a $500-million bond, its largest offshore debt deal in a decade, which was oversubscribed more than three times.
Analysts’ view
“[This] could be a strategic move to take advantage of weaker peso and declining interest rates. Borrowing in dollars when peso is weak would give them more capital in peso terms,” Alfred Benjamin R. Garcia, research head at AP Securities Inc., told InsiderPH.
“Although we’d like to take note that SMPH is already the most heavily leveraged major property developer in terms of net debt to equity and debt as a percent of total capital,” Garcia added.
AP Securities has a “Buy” rating on SM Prime with a target price of P33.84 per share.
SM Prime turns to debt securities over IPO
SM Prime has so far held off from issuing international bonds, preferring to issue domestic notes.
Another potential fundraising source was a REIT listing of its shopping malls, which raised over P50 billion.
But Hans Sy, chair of SM Prime’s executive committee and board member, earlier told InsiderPH that market conditions were unfavorable for IPOs and even suggested the plan might never materialize.
Why is SM Prime raising funds?
SM Prime is spending around P100 billion this year to bankroll expansion, which includes its push into large-scale integrated estates.
One of its latest projects is the 360-hectare Manila Bay reclamation, dubbed Pasay 360, envisioned as a massive smart city that will combine business, residential, and lifestyle developments.
The reclamation development is expected to be completed by 2028.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
