Meralco raises P3b from fixed-rate notes

Manila Standard Today
by Alena Mae S. Flores

Manila Electric Co. said Thursday it successfully raised P3 billion from the sale of 7-year and 10-year fixed rate notes to a group of primary institutional lenders.

Meralco said the issue was oversubscribed by lenders, which included a mix of universal, savings, trust and investment banks, investment funds and insurance companies.

The 7-year and 10-year notes were priced to yield 5.5346 percent and 5.6387 a year, respectively. The 7-year fixed rate notes amounted to P1 billion while the 10-year notes reached P2 billion.

Meralco started selling the notes on Dec. 16, 2011. It said the notes were sold in less than three weeks.

“The Meralco notes were well-received by the market with an oversubscription over the planned issue size of P3 billion,” said Roberto Juanchito Dispo, president of First Metro Investment Corp.

First Metro acted as Meralco’s arranger and underwriter for the transaction.

The board of Meralco approved management’s plan to negotiate a financing facility with one or more financial institutions in December.

Meralco chief operating officer Oscar Reyes earlier said the company planned to use proceeds from the notes for “general funding requirements, mainly addressing our capex for 2012 and ongoing because markets are good now.”

“So while the financial markets are good, we’d like to already position for our capex program so we don’t get just when we need it,” Reyes said.

Meralco president and chief executive Manuel Pangilinan thanked investors for their support as reflected in the tight pricing.

Meralco needs around P12 billion for capital expenditures this year. Meralco also needs to raise financing for its power generation project—the 600-megawatt coal-fired project at the Subic Freeport.