Asia’s top borrowers are increasingly able to secure the funds they need as investor demand for debt returns. However, their concern to make sure the deals sell smoothly in choppy markets means they are having to offer bonds with high yields and work harder to make sure those bonds are sold. When San Miguel Brewery raised Ps38.8 billion ($800 million) in a Philippine record for a corporate issuer on March 16, the deal was led by two banks – HSBC and Development Bank of the Philippines – and underwritten by a further eight companies.
"They hired a basketball team of banks," says Teodoro K Limcaoco, president of BPI Capital, which was one of those underwriters. "San Miguel is a good name," he continues, "with lots of domestic liquidity, and investors are really looking for paper. The bond market has been really shallow in the Philippines, consisting mostly of paper from Ayala [the country’s largest conglomerate] and tier 1 bank notes. Good name corporate borrowers such as San Miguel Brewery are rare, so when a company with its reputation offers a good spread the paper’s going to fly out the door."
With such a small market, says another source who worked on the deal, the San Miguel deal could probably have been successfully sold by just two-thirds of the banks that were hired but hiring a total of 10 firms guaranteed full coverage from available institutional investors and a decent order from retail investors covered by the underwriters’ extensive networks.