Aboitiz Power Corp., the country’s second largest publicly listed power firm by market capitalization, is selling up to Php3 billion worth of 10-year retail bonds that pay a fixed annual coupon rate of 5.3367 percent.
AboitizPower will use the proceeds from this offer to infuse equity into GNPower Dinginin Ltd. Co., which is building a 2 x 668 MW coal plant in Mariveles, Bataan. The company started construction of its first unit in September 2016 and is expected to be operational by 2019.
The retail bonds’ coupon rate is higher than the interest rate of the latest-issued 10-year fixed-rate treasury bond, which stood at 4.75 percent according to data from the Bangko Sentral ng Pilipinas. It is also much higher than the 3.09-percent interest rate of time deposits over two years.
However, investing in corporate retail bonds entail more risks than bank deposits, as the latter is insured by the government. Investors are encouraged to seek professional financial advice before purchasing retail bonds.
AboitizPower has built a portfolio of 46 power plants over the last 19 years with a total attributable net sellable capacity of 2,975 MW as of the first quarter of 2017. Its revenues stood at Php89.2 billion in end-2016, an increase of 4.7 percent from the year before. It owns power distributors that sell electricity to Cebu and Davao cities, the biggest urban centers outside of Metro Manila.
As well, AboitizPower is the largest subsidiary of Aboitiz Equity Ventures, a diversified conglomerate that also has businesses in food, financial services and land development. The company is owned by the Aboitiz family, which held a combined net worth of $5 billion in 2016 according to US-based business magazine Forbes.
Interested investors can avail of the retail bonds for a minimum investment of Php50,000, and additional placements can be made in increments of Php50,000. The offer period began last June 20 and will end on June 23.
The bond offering received a PRS Aaa rating from the Philippine Rating Services Corp., which means the bonds are “of the highest quality with minimal credit risk.” Those interested are advised to view the offer supplement on the company’s website for more details.
This bond offering is the first of several tranches that AboitizPower will offer within the next three years. The company plans to sell retail bonds worth up to a total of Php30 billion across all tranches.
BPI Capital Corp. serves as the sole issue manager, sole underwriter and sole bookrunner of the first tranche. This tranche is also managed by BDO Capital and Investment Corp., First Metro Investment Corp., Land Bank of the Philippines and United Coconut Planters Bank.
Lorenzo Kyle Subido is a staff writer of Entrepreneur PH