More firms to raise funds from bond market

MANILA, Philippines - The Philippine Dealing and Exchange Corp. (PDEx) expects to grow by leaps and bounds the amount of money raised in the bond market as companies scramble to take advantage of the liquidity in the market as well as the low interest rate regime.

PDEx president and chief operating officer Cesar Crisol said the P83.5 billion raised in the bond market last year could easily be surpassed this year as companies have already raised P81.8 billion.

Companies that have tapped the bond market so far this year include JG Summit Holdings Inc. of taipan John Gokongwei, dominant carrier Philippine Long Distance Telephone Co. (PLDT), San Miguel Brewery Inc. of diversified conglomerate San Miguel Corp. (SMC), Filinvest Development Corp. of tycoon Andrew Gotianun, Manila North Tollways Corp. (MNTC) of infrastructure giant Metro Pacific Investments Corp. (MPIC), and multimedia giant ABS-CBN Corp.

JG Summit raised P30 billion from the issuance of fixed rate bonds due 2019, 2021 and 2024, while PLDT raised P15 billion from the issuance of seven- and 10-year bonds, followed by San Miguel Brewery with P15 billion from the issuance of bonds due 2021 and 2024.

Filinvest sold P8.8 billion bonds due 2024, while MNTC raised P7 billion from the issuance of seven- and 10-year bonds, and ABS-CBN likewise raised P6 billion from the sale of seven-year bonds.

Crisol said companies are trying to take advantage of the liquid market as well as the low interest rate regime.

“Right now the corporate bond issuers are trying to take advantage of the liquidity in the market and trying to tap before interest rates go up because of the tapering effect of the US ,” he stressed.

He added that corporate bond issuers are trying to tap the market especially after the Bangko Sentral ng Pilipinas (BSP) raised the reserve requirements for banks during the last policy meeting of the Monetary Board last March 27.

“The increase in the reserve requirement would create more pressure on the bank borrowing cost,” he explained.

The central bank raised the reserve requirement by a percentage point effective April 4. The reserve requirement for commercial banks is now 19 percent from 18 percent, seven percent from six percent for thrift banks, and five percent from four percent for rural banks

The move would guard against potential risks coming from continued strong liquidity growth and rapid credit expansion as this would mop up P60 billion worth of liquidity in the financial system.

“It is a good time for issuers to tap the bond market. I think it is good for the country that you will now be able to finance long-term projects with long-term money. That is a good aspect of development,” Crisol added.

Data show that about 25 companies have raised P420.41 billion from the bond market.

Other companies include property giant Ayala Land, Globe Telecom, GT Capital Holdings, Megaworld, First Metro Investments Corp., SM Investments, Robinsons Land, UCPB, RCBC, Power Assest and Laibilities Management Corp. (PSALM), Tanduay, Rockwell Land, Manila Electric Co., Metrobank, Energy Development Corp., and Aboitiz Equity Ventures.