More firms prefer bonds over loans

More companies borrowed from the local bond market last year instead of borrowing from banks to bankroll their operations and pay off maturing debt. Central bank data showed the amount of corporate bond sales almost quadrupled to P411.8 billion from P117.4 billion in the prior year. Corporate bonds are debt securities issued by public and private companies to investors who want regular cash flows. Unlike stocks, corporate bonds are stable since interest is paid as scheduled and investors get steady returns. The central bank traced the increase to bond sales by nonfinancial corporations that tapped the capital market to raise funds to strengthen their assets and pay off debt. Nonfinancial companies accounted for the bulk or 81.5 percent of total bond sales equivalent to P335.6 billion, while financial corporations cornered the balance. Nonfinancial corporate bond issuers included beer giant San Miguel Brewery, Inc. (P38.8 billion); utility Manila Electric Co. (P17 billion); Ayala-controlled Globe Telecom, Inc. (P15.8 billion); Gokongwei-owned Robinsons Land Corp. (P15 billion); and mall giant SM Prime Holdings Inc. (P11.5 billion). Also issuing local bonds were Sy-owned SM Investments Corp. (P9.4 billion); property giant Ayala Land, Inc. (P7 billion); Aboitiz Power Corp. (P6.89 billion); conglomerate Ayala Corp. (P6 billion); International Container Terminal Services, Inc. (P5.71 billion); Manila North Tollways Co. (P5 billion); and First Gen Corp. (P5 billion). Meanwhile, financial firms that issued bonds last year included Banco de Oro Unibank (P33 billion); Ty-controlled Metropolitan Bank & Trust Co. (P18.5 billion); Lucio Tan-owned Philippine National Bank (P17.75 billion); Yuchengco-owned Rizal Commercial Banking Corp. (P16 billion); Ayala-owned Bank of the Philippine Islands (P10 billion); Security Bank (P6 billion); and China Banking Corp. (P5 billion). In 2008, corporate bond issuances grew by half to to P117.4 billion from a year earlier. Meanwhile, the central bank said total equity raised on the Philippine Stock Exchange (PSE) went up by almost a quarter to P38.8 billion last year even if not a single company had gone public. It traced the increase to P27.7 billion in private placements in conglomerate Metro Pacific Corp. — NPA, GMANews.TV