Petron may borrow another $100M for capex

Petron Corp. may borrow another $100 million this year to support its capital expenditure program.

The oil firm will sign today the P5.5-billion ($100-million) five-year fixed Rate Corporate Notes Issuance (FXCN).

Sources said Petron plans to increase the issuance after it got overwhelming response from the financial market.

Petron chairman Nicasio Alcantara confirmed that the board had allowed the company to raise $200 million to partially finance its $300-million petrochemical project.

Petron president Khalid Al-Faddagh admitted that they would be issuing more of such kind of loan instruments in the future should the need arises.

"We have received an overwhelming response from the market. We will evaluate if we will need to issue more since we got good rates from our recent issuance," he said.

The facility was priced at 8.875 percent for a five-year tenor, 53 basis points lower than the July 21 five-year MART1 rate of 9.405 percent. This issue has achieved the distinction of being the largest peso private placement and the lowest-priced corporate issue of its kind.

Last February, Petron’s overall credit worthiness was given a PRS Aaa rating by Philratings Corp. A rating of PRS Aaa is given to corporations with a very strong capacity to meet its financial requirements relative to that of other Philippine companies.

For this part, Petron chairman Nicasio I. Alcantara said, "we are extremely happy with our arrangers, BPI Capital Corp. and ING Bank N.V., Manila Branch, who demonstrated deal savvy and a deep appreciation of the market by structuring and pricing this landmark transaction in a volatile market."