PHOENIX PETROLEUM Philippines, Inc. is looking to raise P5 billion by the first half of next year apart from the remaining P3 billion in short-term commercial papers that it is considering to issue around the same period, company officials said on Thursday.
“[The] P3 billion is still for short-term requirements, basically working capital. So we’ll just take advantage if the benchmark rates go down then probably we will [issue the remaining commercial papers],” Ma. Concepcion F. De Claro, Phoenix Petroleum chief finance officer, told reporters after the listing of the company’s P7-billion debt instruments on Thursday.
The initial offer is part of the P10-billion commercial papers that had been approved by the Securities and Exchange Commission. Its size is in two series, with Series A-1 at P3.5 billion set at a maturity of 180 days at a discount rate of 7.0937%. Series A-2 commercial papers at P3.5 billion are for 360 days, and have a discount rate of 7.4717%.
The proceeds will be used to refinance existing short-term loans of the issuer, which were used to finance working capital requirements for fuel importation, the company previously said.
“We’re trying to fix that up because there are some maturing loans. We’ll just replace them — basically just shorter six months to a year,” Ms. De Claro said.
She said the discount rates for the first tranche have a spread over existing benchmark rates of 6.75-7%.
“We hope [rates] to be lower again about 6-6.5%,” she said. “There’s always a spread, the spread is very reasonable. We got good rates in terms of the spread. So we’re hoping [in] the next issuance interest rates will go down,” she added.
Asked about the possible listing of the remaining P3 billion, Ms. De Claro said it will be by mid-2019.
She noted the decision of the Bangko Sentral ng Pilipinas not to raise interest rates recently was “a good sign.”
Ms. De Claro said the company was looking to raise P5 billion more through an offering next year for long-term capital requirement. The possible issuance follows the private placement of 2 million preferred shares for P2 billion or P1,000 per apiece.
Joseph John L. Ong, Phoenix Petroleum treasurer and head of corporate finance, said the private placement was with RCBC Capital Corp., issue manager and underwriter.
“Who they sell it to we don’t know and we don’t care. It’s not anymore our problem. But they got the whole thing,” he said.
Proceeds of the private placement will be used for capital expenditure, the company officials said.
Mr. Ong said they have yet to determine the exact issuance date of the bigger offering, although they are targeting it by the first half.
“The P5 billion actually is not yet final, that has not been filed yet so we’re thinking about it,” he said.
The decision on the issuance would depend on the market and rates, Mr. Ong added.
“Kasi like alam naman natin the last couple of months talagang volatile ‘yung market. (We know in the last couple of months, the market has been really volatile) So even a lot of issuers opted to defer to next year,” he said.
Phoenix Petroleum’s listing on Thursday was the last for the year at the Philippine Dealing & Exchange Corp. (PDEx).
“We shall finish this year with a total of P256.39 billion in new listings, representing a 24% increase from last year’s figures,” said Ma. Theresa B. Ravalo, officer-in-charge of the PDS Group, the exchange’s infrastructure provider.
She said the total outstanding amount of bonds listed or enrolled in PDEx is expected to reach P1.045 trillion in 2018, 32% higher than in 2017. — Victor V. Saulon