By Alexandria Grace C. Magno, Reporter
SM PRIME Holdings, Inc. has deferred the fourth tranche of its fixed-rate bond issuance, citing prevailing market conditions, in a move analysts described as a timing decision moderately than a shift in funding strategy.
The Sy-led property developer said the planned offer would have raised as much as P12 billion, with a P6-billion oversubscription option. It covered 5.75-year Series AE bonds due in 2032 and 10-year Series AF bonds due in 2036.
“The corporate will provide the exchange with updates on future plans referring to the bond offer in accordance with applicable disclosure requirements,” it said in a stock exchange filing on Wednesday.
The issuance forms a part of SM Prime’s P100-billion shelf-registered bond program. It also carries a PRS Aaa rating from Philippine Rating Services Corp., the best possible rating, which signals minimal credit risk and robust capability to fulfill financial obligations.
Analysts said the deferral reflects conditions within the debt market, particularly borrowing costs and investor demand, moderately than financial pressure at the corporate level.
Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said corporations often delay issuance when pricing conditions should not optimal.
“When an organization cites ‘market conditions’ as the rationale for a postponement, it often reflects a view that prevailing yields, liquidity conditions, or investor appetite don’t currently provide probably the most favorable terms,” he said in a Viber message.
He added that corporations with strong credit profiles could afford to attend for higher execution windows as an alternative of accepting higher interest costs.
SM Prime’s move is consistent with capital market behavior amongst large issuers managing long-term funding programs, said Luis A. Limlingan, head of sales at Regina Capital Development Corp.
“With rising borrowing costs and unsure global rates of interest, the corporate could have decided that postponing the issuance could provide more flexibility in securing more attractive terms,” he told BusinessWorld via Viber.
He noted that the deferral doesn’t indicate funding stress, as SM Prime maintains access to internal money flows, bank financing and future capital market issuance.
“The delay likely reflects a reassessment of timing and costs moderately than a shift in long-term capital plans,” he added.
SM Prime reported a first-quarter net income of P11.66 billion, barely higher than P11.65 billion a 12 months earlier, supported by stable rental income and other recurring revenues that offset softer real estate sales.
Consolidated revenue rose 2% to P33.3 billion, while real estate sales weakened but were cushioned by growth in mall and leasing operations. Capital expenditures for the quarter reached P15.5 billion, down 9% from a 12 months earlier.
SM Prime reported total assets of P1.1 trillion as of March, underscoring its position as one among the country’s biggest listed property developers.
The corporate earlier said it might tighten capital spending and work more closely with tenants and partners because it responds to a more difficult operating environment.
It cited elevated inflation and rates of interest — partly driven by the war within the Middle East — which have kept financing costs higher than historical levels and are expected to stay a consider planning through the medium term.
Despite these headwinds, SM Prime has maintained regular earnings performance, driven largely by its mall and integrated property portfolio, which continues to offer stable recurring income.
Analysts said the deferred bond tranche is more likely to be revisited once market yields stabilize, especially given the corporate’s long-term development pipeline and expansion plans across malls, residential and business segments.
SM Prime shares fell 0.54% to P18.40 each on the local bourse.