SM Prime Successfully Raises $350 Million in Oversubscribed Dollar Bond
Listed property developer SM Prime Holdings, Inc. (SMPH) has successfully raised $350 million through its inaugural dollar-denominated bond issuance, securing significant capital to aggressively fund its comprehensive expansion plans.
In a recent disclosure, SMPH confirmed that the offering was met with immense market enthusiasm, demonstrating strong investor confidence as it was nearly three times oversubscribed, with total demand soaring to over $990 million.
This successful issuance represents the second drawdown by SMPHI SG Holdings Pte. Ltd., a wholly owned subsidiary, under the existing $3-billion multi-issuer European Medium-Term Note (EMTN) program established by SM Prime.
The notes are set to be listed on the Singapore Exchange, carrying a competitive coupon rate of 4.75% and scheduled to mature in five years.
The distribution of the bonds showed a strong regional preference, with 91% allocated to Asia-based investors, while the remaining 9% was distributed across Europe, the Middle East, and Africa.
The investor composition further highlighted the quality of the buyers, with 80% allocated to fund managers, 12% to banks, 4% to private banks, 3% to various financial institutions, and 1% to insurers.
The notes were formally issued by SMPHI SG Holdings and fully guaranteed by the parent company, SM Prime.
A syndicate of international financial heavyweights— HSBC, J.P. Morgan, Standard Chartered Bank, and UBS—served as joint lead managers and joint bookrunners, with BDO Capital and Chinabank Capital acting as joint domestic managers, ensuring broad market access.
Strategic Capital Deployment and Investor Confidence
SM Prime President Jeffrey C. Lim affirmed that the latest capital raise was timed strategically to support the company’s ambitious future projects, underscoring that the sustained interest from global investors reflects their long-term confidence in the company’s growth trajectory and its development pipelines.
Mr. Lim stated, “Through this latest drawdown, we are able to tap the market at an opportune time to support our future projects and strategic initiatives,” emphasizing the tactical nature of the issuance.
He further noted that “The continued interest from global investors underscores their sustained confidence in our long-term growth prospects,” validating the company’s financial stability and market position.
The substantial proceeds from this bond issuance are earmarked for financing a significant expansion strategy, which includes 16 major redevelopments of existing properties and the planned construction of 12 new lifestyle malls, all scheduled to take place between 2026 and 2030.
This robust domestic pipeline is complemented by SM Prime’s international growth ambitions, with preparations underway for the opening of new malls in Xiamen and Fujian, China, signaling a multi-front expansion.
This strategic capital raising follows the company’s decision to defer its previously planned $1-billion real estate investment trust (REIT) listing until beyond 2026 due to the prevailing unfavorable market conditions for such offerings, demonstrating a pragmatic approach to financing.
For the first half of the year, SM Prime reported strong operational results, posting an 11% rise in net income to P24.5 billion, financial health which likely underpinned the oversubscription of the new notes.
Market Valuation and Strong Financial Recommendation
Independent analysis from Fitch Solutions unit CreditSights strongly recommended the SM Prime issuance to investors, citing the notes’ solid quality as Philippine senior dated paper from a company belonging to a highly reputed conglomerate, and highlighting the fair value pricing of the new five-year bond.
CreditSights specifically recommended the planned issuance to investors who “are fine with just marginal spread performance but are happy to hold on to a solid quality Philippine senior dated paper from a company belonging to well-reputed conglomerate.”
This assessment emphasizes the security and institutional quality of the investment, aligning the SM Prime notes with reliable fixed-income assets.
The firm also provided an informed valuation of the new debt, stating, “We see fair value for the new SMPH five-year bond at T+130 basis points (bp) or 4.87% yield.”
They further forecasted the final pricing, predicting, “We expect the bond to price around 25-30 bp tighter from the IPT [Initial Price Talk] to land at T+120-125 bp,” which suggests the notes priced favorably due to high demand.
The success of the issuance was reflected in the market performance of the company’s stock, as SM Prime shares on the day of the disclosure rose by 1.27%, or 30 centavos, to close at P24 apiece, signaling a positive market reaction to the successful capital injection and the underlying expansion strategy.
This financial strategy ensures that SM Prime, through the successful raising of this capital, is well-positioned to execute its extensive pipeline of projects, securing its dominant role in the regional property development landscape.
