Investors invade D & L’s first bond float
September 3, 2021 | 12:13
MANILA, Philippines – The first bond sale of D&L Industries Inc., a listed manufacturer of specialty chemicals and food ingredients, has met strong investor demand, helping the company to borrow funds at great cost. lower.
Orders placed by investors for the bonds amounted to 13.8 billion pesos, nearly five times the original offering size of 3 billion pesos, D&L said in a statement to the exchange on Friday.
Strong demand prompted the company to exercise an oversubscription option of up to 2 billion pesos, bringing the total proceeds from the bond sale to 5 billion pesos. Broken down, P3 billion “series A bonds” will mature in 3 years while P2 billion “series B bonds” have a longer payment term of 5 years.
The overwhelming orders received, in turn, lowered borrowing costs for D&L. Interest charged for debt securities – determined by a coupon rate – was 2.79% per annum for Series A bonds and 3.6% per annum for Series B bonds. ‘interest will be paid quarterly in arrears
“We are overwhelmed by the strong support the fixed income community has shown us during our first bond issue. This has allowed us to price our bonds at some of the lowest rates in Philippine corporate bond history, ”said Alvin Lao, President and CEO of the company.
D&L has exploited the debt market as it is recovering from the onslaught of the coronavirus. In the first half, profits rose 74% year-on-year to 1.4 billion pesos as consolidated profit is already at pre-pandemic levels, with all business segments “showing a significant recovery” .
The proceeds from the bond issue will mainly be used to finance the company’s expansion plans in Batangas and the corresponding working capital requirements.
Construction of the said plant started at the end of 2018 and commercial operations are expected to begin partially in May 2022. The total estimated capital expenditure for the said facility is around 8 billion pesos, with around 3.5 billion pesos. pesos remaining to be spent.
At 12:08 p.m., D&L shares were trading at 8.30 P each. – Ian Nicolas Cigaral