Port operator International Container Terminal Services Inc. (ICTSI) on Tuesday said it has raised some $400-million 10-year unsecured senior notes in the offshore market, the first local company to do so against the backdrop of the coronavirus pandemic.
This is the first time that the port operator tapped the offshore market in two years since the issuance of perpetual bonds in 2018.
Proceeds of the notes issuance will be used to refinance and extend the maturity of ICTSI’s liabilities and for general corporate purposes.
“The transaction furthers ICTSI’s prudent balance sheet management and capital structure optimization initiatives in response to the economic disruption” due to state measures to contain the Covid-19 (coronavirus disease 2019) pandemic, the company said. The notes were priced with a fixed coupon of 4.75 percent per year, payable on a semi-annual basis and a price of 99.607 to yield 4.8 percent per year.
“Upon issuance, the notes will constitute direct, unconditional, unsubordinated and unsecured obligations of the issuer, pari passu without any preference among themselves and with all other outstanding unsecured and unsubordinated obligations of the issuer,” it said.
The offering attracted strong demand from a wide array of accounts and pricing was compressed 45 basis points from initial marketing to final pricing levels.
Demand allocable at final pricing was in excess of $1.85 billion from over 111 accounts, equivalent to order-book oversubscription of over 4.6 times.
The notes were distributed with fund managers and asset managers having allocated approximately 65 percent of the offering, 21 percent to banks and private banks and 14 percent to insurance and pension funds. By geography, investors in Asia took 80 percent of the offering, EMEA (Europe, Middle East and Africa) at 19 percent and offshore U.S. 1 percent.
ICTSI said it moved swiftly to capitalize on the conducive market backdrop and pent-up investor demand to be the first Philippine corporate issuer to access the international bond markets following the volatility from the covid-19 pandemic and the drop in oil prices.
Upon issuance, the notes will also be the first corporate bond offering from the Philippines to feature investment grade terms with no financial or leverage covenants.
“This transaction is in line with our focus on prudent balance sheet management, which allows us to sustainably execute on our business strategies and increase ICTSI’s resilience particularly in this time of economic disruption,” ICTSI’s Senior Vice President and CFO Rafael D. Consing Jr., said.
Citigroup, Credit Suisse and J.P. Morgan acted as joint lead managers and joint bookrunners for the offering.