Fund raising at the bond market is expected to reach P150 billion in 2017, despite the possible interest rate hike, according to the Philippine Dealing & Exchange Corp., the operator of the country’s fixed-income exchange.
PDEx chairman and chief executive Cesar Crisol said in a recent interview companies would likely continue to tap the bond market to fund capital requirements for 2017 and refinance maturing obligations.
Crisol said he also expected companies that filed for shelf registration to issue succeeding tranches this year.
“The P150-billion target for 2017 is an aspiration and will still depend on economic activities. But the government is focused on infrastructure, so there will still be requirements for funding,” Crisol said.
He said while higher interest rates would hurt companies planning to tap the capital markets, the recent US rate increase and the expected rate hikes in 2017 would not be that significant.
“It is still cheap and we have gone through worst times,” Crisol said.
The US Federal Reserve raised interest rate by 25 basis points (0.25 percent) in November last year, amid signs of improving US economy. Analysts expect the US Fed to implement three more increases this year.
Meanwhile, Crisol said he expected companies engaged in infrastructure to continue to tap the bond market for funding requirements.
Among the companies that are planning to issue bonds in 2017 are San Miguel Corp. which aims to issue up to P20 billion fixed-rate bonds, Filinvest Land Inc. and SM Prime Holdings Inc.
Fundraising through the fixed-income exchange amounted to P136.46 billion in 2016, up by 27 percent from P107.4 billion in 2015 with a total of 16 listings.
Among the companies that issued bonds in 2016 were SM Investments Corp. (P15 billion), Petron Corp., (P20 billion), Metrobank (P8.65 billion LTNCDs), SM Prime Holdings Inc. (P10 billion), SMC Global Power Holdings Inc., (P15 billion), Ayala Corp. (P10 billion), SL Agritech Corp. (P1 billion short term commercial papers) and Phoenix Petroleum (P3.5 billion short term commercial papers).
The total level of tradable corporate debt instruments with PDEx stood at P646.92 billion issued by 40 companies as of end-2016.