SMIC and SM Prime will create an initial $3 billion banknote program

SM Investments Corp. (SMIC) and its real estate unit SM Prime Holdings Inc. is tapping the overseas market through an initial $3 billion medium-term bond (EMTN) program, the largest issuance of its kind by a Philippine company, company officials said on Tuesday.

The funds will contribute to the company’s future needs, SMIC vice president Teresita Sy-Coson told Reuters.

“We don’t need it now, but for the future,” Ms. Coson added.

The companies, owned by the Philippines’ richest family, want to spend the full $3 billion in the next three to five years, Ms. Coson said.

The conglomerate has set up an entity in Singapore to facilitate the issuance of the notes.

The EMTNs will fund financing needs including expansion and debt payments, SM Prime Minister Jeffrey Lim told Reuters.

EMTNs are debt securities issued and traded abroad.

SMIC, which has interests in the banking, retail, property, shipping and leisure and gaming sectors, has earmarked US$100 billion ($1.74 billion) for capital expenditure in 2024.

It plans to open four new shopping centers and launch 8,000 to 10,000 residential units.

BDO Unibank, the Philippines’ largest lender by assets and a subsidiary of SMIC, has launched a $2 billion EMTN program.

REIT IPO of SM PRIME

Meanwhile, SM Prime said the public listing of its planned $1 billion real estate investment trust (REIT) is not possible this year due to interest rate risks.

“Given the interest rate environment and market volatility, I don’t think we can do this this year (REIT IPO), but we will continue to assess as we move forward,” SM Prime Minister Jeffrey C. Lim said during a briefing on Tuesday.

“Next year we will see, because we don’t know what will happen in the coming months. I don’t think this is the right time to do this,” he added.

In August last year, SM Prime’s parent company SMIC said the REIT’s planned IPO had been postponed due to market headwinds such as higher interest rates, inflation and market sentiment.

The listing was initially aimed at the second half of last year.

Proceeds from the initial public offering (IPO) will be used for the company’s expansion plans and the Manila Bay reclamation project.

Earlier this month, the Philippine central bank decided to keep its target reverse repurchase rate at 6.5% for the fourth time in a row. Interest rates on overnight deposits and credit facilities were also maintained at 6% and 7%.

“It’s a matter of timing. We continue to look at retail REIT as an option, but it is a matter of timing given the market conditions at the moment,” said John Nai Peng C. Ong, Chief Finance Officer of SM Prime.

Glenn D. Ang, president of SM Smart City Infrastructure and Development Corp., said separately that the company’s reclamation project is on track and will be handed over in 2028 despite the delay in the REIT IPO.

“We are following our timeline. It hasn’t been moved yet. To the extent the delay was mentioned, we have developed a draft program to accelerate and catch up on our timeline. So far we are on track. As we promised, this will be handed over in 2028,” he said. — Reuters And Revin Mikhael D. Ochave