ABOITIZ Equity Ventures, Inc. (AEV) secured the highest rating for its planned issuance of P5 billion in fixed rate retail bonds, according to local debt watcher Philippine Rating Services Corp. (PhilRatings).

In a statement issued over the weekend, PhilRatings said it assigned AEV’s bonds a credit rating of PRS Aaa — the highest on its long-term issue credit rating scale. This indicates that the bonds are of the highest quality with minimal credit risk.

“The obligor’s capacity to meet its financial commitment on the obligation is extremely strong,” PhilRatings said.

The rating was also given a stable outlook, which means it is likely to remain the same within the next 12 months.

PhilRatings considered AEV’s management team, sustainable profitability, and growing asset and investment portfolio in coming up with the rating.

“Over the projected period, AEV expects growth to continue to be supported mainly by the continued increase in its power and food business segments. Margins are expected to stabilize and recover in the coming years,” according to PhilRatings.

The issuance has a base size of P3 billion and an oversubscription option of up to P2 billion. AEV’s preliminary prospectus dated March 29 has set the maturity of the bonds at five years for Series A and 10 years for Series B.

AEV named BDO Capital & Investment Corp. and First Metro Investment Corp. as the offering’s joint issue managers, joint lead underwriters, and joint bookrunners.

The company expects to net up to P4.94 billion from the issuance, should the oversubscription option be fully exercised.

Proceeds of the offering will be used to refinance the medium-term loan of AEV’s wholly owned unit, AEV International Pte. Ltd.

AEV International had acquired a $338-million loan to finance the acquisition of a 75% equity interest in Gold Coin Management Holdings Ltd. of another AEV unit, Pilmico International Pte. Ltd.

Pilmico International purchased a majority stake in Singapore-based Gold Coin in 2018, extending its control over one of Asia’s largest privately owned agribusiness corporations. Gold Coin operates 20 livestock and aqua feed mills across 11 countries in the Asia-Pacific region.

The company is planning to invest up to $200 million in the next two to three years to further expand Gold Coin’s factories in the region.

AEV booked a consolidated net income of P3.5 billion in the first quarter of 2019, 27% lower year on year, as it was weighed down by non-recurring losses. Without one-time losses, the listed conglomerate’s core net income would still be lower by 27% at P3.9 billion.

The company recorded P334 million in one-time losses from January to March due to unrealized foreign exchange losses from the revaluation of dollar-denominated assets and recognized losses on derivatives. — Arra B. Francia

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