SINGAPORE: Tapping the Philippine debt capital markets for the first time, Del Monte Philippines Inc (DMPI) has successfully raised P6.47 billion worth of fixed-rate bonds.
Del Monte Philippines Inc (DMPI) intends to list the bonds in the Philippine Dealing & Exchange Corporation on 30 October 2020.
“The success of the bond offering reflects the investing public’s confidence and optimism in DMPI’s strong fundamentals and long-term prospects as well as the company’s financial strength and capability to meet our financial obligations,” said Joselito D Campos, Jr, CEO of Del Monte Pacific Ltd and DMPI.
The issuance, which consists of three-year bonds with an interest rate of 3.484 percent and five-year bonds with an interest rate of 3.7563 percent, was 1.29x oversubscribed. It was well-received by a good mix of retail and institutional investors that include insurance companies, retirement funds and asset management groups, among others.
PhilRatings assigned the DMPI bonds with its highest Issue Credit Rating of PRS Aaa, with a Stable Outlook. Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
While various businesses have been affected by the coronavirus outbreak and the prevailing community quarantine, Filipino families continue to spend a significant amount of their income on food.
PhilRatings noted that opportunities remain for food and beverage companies like DMPI as their product offerings are classified as basic and essential goods. Proceeds from this issuance will be used to refinance and term out existing short-term loans and convert them into long-term liabilities.
BDO Capital and Investment Corporation, China Bank Capital Corporation, First Metro Investment Corporation and RCBC Capital Corporation were the mandated joint issue managers, joint lead underwriters and joint bookrunners for the maiden bond issuance. Exchange Equity Partners acted as financial adviser to DMPI.
DMPI has been operating in the Philippines for 94 years and is the reigning market leader in canned pineapple and mixed fruit, canned and tetra ready-to-drink juices, tomato sauce and spaghetti sauce categories, under its iconic Del Monte brand. DMPI is one of the largest food and beverage companies in the Philippines operating an integrated 26,000-hectare pineapple plantation in Bukidnon, one of the largest in the world.
DMPI generated sales of P7.4 billion in the first quarter ending July 2020 with domestic sales comprising about two-thirds and the balance from the international market.
With local benchmark interest rates approaching historic lows and the current system liquidity nearly reaching twice the level in 2019, DMPI saw an opportunity to lower borrowing costs while lengthening debt maturity profile.