Transactions completed in just less than two weeks, achieved the record 4.125% coupon rate for 7-yr note of a Philippine corporate entity

Andrew Tan-led Megaworld Corporation has successfully closed and completed its US$350-million Reg S Registered US dollar-denominated Senior Unsecured Fixed Rate Notes offering, with a 7-year tenor and a coupon rate of 4.125%, the lowest coupon achieved for a Philippine corporate entity on a 7-year US dollar public bond transaction.

The Notes, which will be listed on the Singapore Exchange Securities Trading Limited on August 3, 2020, are considered to be Megaworld’s first senior vanilla bond issuance since 2013, and the lowest ever coupon in the US dollar bond market achieved by the company throughout its corporate history.

Investor calls were conducted throughout Asia and Europe on July 22, 2020, achieving strong participation and discussions among top investors, which centered on an update of the MEG credit and its relative resilience compared to other Philippine real estate issuers against the backdrop of the ongoing COVID-19 pandemic. 

Terms for a new 7-year USD benchmark were released the following day after receipt of significant indications of interest. Books were in excess of US$500-million prior to Asia lunch hour, and reached US$1-billion prior to the release of final price guidance. Strong momentum and quality of the orderbook led to a strategic pricing decision at a coupon rate of 4.125%. 

The quality of the orderbook allowed almost 40% of the transaction to be allocated to fund managers and asset managers.

Aside from the new record low for a USD bond coupon from a Philippine real estate company, the printing of notes was the largest issue size for USD bond offering among real estate companies in the Philippines. It also recorded the fastest completion among USD bond issuances by a Philippine corporate issuer of only 11 days.

“This issuance puts Megaworld in a good position to benefit from the eventual recovery of the Philippine economy. In spite of the pandemic, demand for real estate offerings has remained strong as many still view it as a safe investment. Additionally, we foresee that business process outsourcing (BPO) companies may need more office spaces because of physical distancing requirements. This infusion of funds will support our investment pipeline and future land banking initiatives,” says Kevin L. Tan, chief strategy officer, Megaworld. 

Citigroup Global Markets Limited and The Hongkong and Shanghai Banking Corporation Limited were appointed as Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners, while Credit Suisse (Singapore) Limited and J.P. Morgan Securities plc were appointed as Joint Lead Managers and Joint Bookrunners.

BDO Capital & Investment Corporation was appointed as Domestic Lead Manager.