Philippines: San Miguel pricing hybrid perpetual securities

San Miguel is expected to price a hybrid perpetual securities issue on April 27. According to Reuters, earlier on April 27, an e-mail sent to potential investors said the deal, which would be callable in five years and at the end of each quarter thereafter, was targeted to be priced on Thursday during New York trading hours.

The source said the issue size had yet to be fixed. The e-mail obtained by Reuters said the offer would have a range of $300 million to $400 million. The hybrid issue had attracted more than $700 million of orders, the source added. The indicative yield remained at 9.0 percent for the Philippine offering, which banking sources said was the first hybrid issue from an Asian company other than financial institutions.

San Miguel President Ramon Ang stated last week the company aimed to raise $300 million from the offering to pay off debt. It is a rare foray into the capital markets by San Miguel, the Philippines' second-largest company, which is 20 percent owned by Japan's Kirin Brewery.

San Miguel tended to rely on bank loans for its funding needs but is turning to the market as it expands beyond its home base. It last issued bonds about 10 years ago. Citigroup, Credit Suisse , Deutsche Bank and HSBC are joint bookrunners for the proposed hybrid issue, which is rated (P)Ba3 by Moody's Investors Service and B by Standard & Poor's.

Hybrid bonds are deeply subordinated, very long-dated or perpetual securities that allow borrowers to boost their balance sheet without diluting existing shareholders' holdings, while paying investors returns that are higher than those on senior bonds.

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