MANILA, Philippines - Property giant Megaworld Corp. has secured $250 million in fresh funding from foreign investors as it issued bonds at record low yields.
Proceeds from the bond sale, which came just a few weeks after a credit rating upgrade on the Philippines, will support the company’s record P35-billion spending this year.
“Megaworld priced its $250-million, 10-year bonds Wednesday night at 4.25 percent, the lowest ever yield for a 10-year Philippine corporate bond and also the lowest yield for an unrated issuer in Southeast Asia,†said Lauro C. Baja III, managing director of sale bookrunner UBS Investments Philippines Inc. said.
More than 40 investors took advantage of Megaworld’s return to the overseas capital market as the issue generated $500 million in orders, Baja said.
Of the investors, 20 percent were fund managers, 35 percent were banks, 40 percent were private banks and five percent were insurance firms.
Early this year, the property arm of conglomerate Alliance Global Group Inc. (AGI) committed to spend a record P35 billion for its property projects this year amid the property boom, up from P25 billion in 2012.
The Andrew Tan-led property group, which recorded P63.5 billion in residential reservation sales last year, will launch at least 10 new projects in the first half given robust demand.
“The strength of the underlying credit of Megaworld combined with the solid shareholder support from AGI allowed them to achieve the lowest ever yield for a 10-year Philippine corporate bond,†Baja said.
He said 98 percent of the investors were based in Asia.
Late in March, Fitch Ratings upgraded the Philippines’ sovereign ratings to investment grade, citing “resilient economic growth†and fiscal reforms.
Megaworld said the corporate notes will be listed in the Singapore Exchange Securities Trading Ltd. (SGX-ST).
In April last year, Megaworld raised $200 million from the issuance of seven-year, dollar-denominated notes that were used to pay debts and fund operations. The bonds were listed in the SGX-ST.
The Megaworld group is composed of three brands: Megaworld, medium-cost housing arm Empire East Land Holdings Inc. and affordable housing unit Suntrust Properties, Inc.
Like other real estate firms, the listed firm is benefiting from low interest rates that spur home loans, increasing income of the middle class, high demand amid a backlog and growth in the office segment driven by the outsourcing industry.
In more than 20 years of operations, the Megaworld group has completed more than 240 residential and office buildings with a total floor area of around six million square meters.
Megaworld, which pioneered the “live-work-play-learn†concept, it has developed township and business park projects like Eastwood City, Forbestown Center, McKinley Hill and Newport City.
Its profits climbed 21 percent to P7.3 billion last year as the property group recorded more than P63 billion in reservation sales involving 12,000 residential units.