Petron hikes bond float to P10 billion

MANILA, Philippines – Petron Corp., the country’s largest oil refiner, decided yesterday to increase the size of its bond float from P3 billion to P10 billion.

During the signing of the Fixed Rate Corporate Notes (FXCN), Petron president Eric Recto said they raised the issuance size by P7 billion due to a high demand from participating banks. 

The issue, one of the largest corporate note issuances in the history of local debt capital markets, was more than three times oversubscribed and was priced at 8.139 percent for the five-year tenor and 9.329 percent for the seven-year tenor.  

Petron’s FXCN was jointly arranged by BPI Capital Corp. and ING Bank NV, Manila branch as joint issue managers together with the Development Bank of the Philippines and The Hongkong and Shanghai Banking Corp. Ltd. as joint lead managers.

Recto said the facility was priced 200 basis points over the applicable benchmark PDSTF rate, the lowest end of the company’s pricing guidance. “The strong and positive response to our notes issue reflects the trust and confidence of the investment community in the viability and profitability of Petron over the long-term. It, likewise underscores the company’s solid fundamentals, undisputed market leadership, extensive and efficient distribution network and numerous synergies with San Miguel,” Recto said.

This month, PhilRatings gave a PRS Aaa rating – the highest possible corporate rating – for Petron’s outstanding P6.3 billion corporate notes issued in July 2006. PhilRatings also gave the same rating to the company’s overall capacity to service its maturing debts.   

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 corporates.” 

Given the upsize of Petron’s FXCN, the company said that it will no longer pursue its initial plan to issue retail bonds.  

Proceeds from the FXCN will be used to pursue projects such as an aggressive retail network expansion program and additional improvements at its 180,000 barrel-per-day Bataan refinery.