In a disclosure to the Philippine Stock Exchange yesterday, Megaworld said its board has approved a debt securities program that would have an initial issuance of up to P8 billion worth of fixed-rate bonds with an oversubscription option of as much as P4 billion.
Megaworld has appointed BDO Capital & Investment Corp. as issue manager, lead underwriter and bookrunner for the bonds.
It has authorized its management to determine the terms and conditions, including the pricing of the bonds.
The bonds were registered under the shelf registration program, which allows issuers to sell the securities in tranches for a period not exceeding three years.
Megaworld’s proposed bond issue was assigned a rating of PRS Aaa by local credit watchdog Philippine Rating Services Corp.
Obligations rated PRS Aaa are of the highest quality with minimal credit risk. This means the issuer’s capacity to meet its financial commitment on the obligation is extremely strong.
PRS Aaa is the highest rating assigned by PhilRatings. The rating was also assigned an Outlook of Stable, which means the assigned credit rating is likely to remain unchanged in the next 12 months.
In giving the rating, PhilRatings considered Megaworld’s ample liquidity, sound capitalization and high-quality management, as well as expectations its growth strategy will significantly benefit from the continued positive performance of the country’s economic growth drivers.
Megaworld is engaged in the development of large scale, mixed-use planned communities or townships that integrate residential, commercial, leisure and entertainment components within Metro Manila and other key cities such as Cebu, Iloilo and Davao.
PhilRatings expects Megaworld’s cash from operations to remain positive from 2016 to 2024, with funding largely sourced from internally generated cash flows.
“Current ratio has been kept above three times for the last five years (2011-2015), and will remain more than satisfactory for the forecast years. Going forward, liquidity will be further bolstered by the increasing share of recurring rental income to revenues. Historically, coverage of operating expenses from rental income has ranged from 93.5 percent (2011) to 109.2 percent (2015),” PhilRatings said.
“Debt management has been sound, with debt to equity ratio kept below 0.4x for 2011-2015. Even with the proposed P30 billion bonds, DE ratio will be kept below 1.0x, with the increase in debt accompanied by strong growth in equity attributable to plowback of earnings,” the credit watchdog said.
