Analysts see SM Prime’s US dollar bond issue as strategic funding for expansion
By Beatriz Marie D. Cruz, Reporter
SM PRIME HOLDINGS, INC.’S (SMPH) planned issuance of US dollar-denominated senior notes aligns with the need to diversify its funding sources, as it defers the initial public offering (IPO) of its planned real estate investment trust (REIT), analysts said.
“SMPH’s plan to issue US dollar-denominated senior notes and tap the foreign debt market could be linked to favorable market conditions for dollar-denominated bonds, providing access to global investors at potentially lower interest rates compared to local borrowing options,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“With the REIT IPO postponed, issuing bonds helps maintain liquidity and financing flexibility, especially for ongoing projects,” Mr. Limlingan added.
On Monday, SMPH told the stock exchange that it had mandated a group of global and domestic banks to arrange fixed-income investor meetings for its planned dollar bond issuance.
The company has allotted over P150 billion for 16 major redevelopments and 12 new lifestyle malls from 2026 to 2030. It also has plans to open a new mall in Xiamen, China next month and in Fujian by 2027.
The SM Prime reclamation project in Pasay, called Pasay 360, has an investment of P25 billion.
“SMPH is one of the largest property developers in Southeast Asia and has ambitious growth plans, so it makes sense for them to diversify their funding mix by tapping the offshore bond market,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
“Given the scale of the company’s capex (capital expenditure) requirements for mall development and redevelopment as well as for the completion of the Pasay 360 reclamation project, it helps to have active financing options in both the peso and dollar credit markets,” he added.
In August, SMPH said it would put on hold the supposed $1-billion IPO of its REIT to beyond 2026 amid unfavorable market conditions.
Mr. Colet said that SMPH may consider a REIT IPO contingent on lower interest rates and a better stock market performance.
“They may revisit that plan down the road when interest rates are much lower, our stock market is stronger, and valuations are better. It is also advisable for potential REIT candidates to wait for the SEC’s (Securities and Exchange Commission) proposed reforms to the REIT rules as that could make listing more attractive.”
Mr. Limlingan also cited strong investor appetite for REITs, a favorable macroeconomic environment, and a recovery in property market trends as key factors before the company can proceed with its REIT IPO.
SM Prime Chief Finance Officer John Nai Peng C. Ong earlier said the company was also considering the use of green financing in its fundraising initiatives.
SMPH recorded an 11% increase in its first-half net income to P24.5 billion, with consolidated revenue growing by 5% to P68 billion amid higher rental income, real estate sales, and ancillary revenues.
SM Prime shares on Tuesday were up by 1.28% or 30 centavos to close at P23.70 apiece.
