UBS was the sole bookrunner on the deal, which was issued via MegaworldÆs SPV -Megaworld Cayman Islands
Initially announced in May, the deal was delayed when the markets turned sour. Indeed the high-yield market has been all but closed since May, leaving a number of deals sitting on the sideline awaiting an opportunity to come to market. That long-awaited issuance window looks to have materialised after the Philippines's $750 million sovereign offering was more than 16 times subscribed with an order book worth over $12 billion.
The Megaworld deal was priced at 98.488% on a semi-annual coupon of 7.875% to yield 8.25%, which was spot on with the initial yield guidance provided by UBS. The yield is equivalent to 327.1bp over comparable US Treasuries.
The Philippine real-estate market has been booming over the past few years and Megaworld has managed to position itself into one of the countryÆs top developers with an impressive portfolio of large-scale residential and office properties within Metro-Manila.
Megaworld posted positive year-end results last year; compared to 2004, revenues were up almost 20% in 2005 at Ps5.32 billion ($103.6 million). And on the back of a reduction in capital expenditure from Ps3.5 billion to Ps866 million, its net profit increased by 43% to Ps1.15 billion from Ps807.69 million in 2004.
Additionally, Megaworld saw an increase in rental income for the fifth consecutive year. In 2000, the company reported a rental income of Ps40 million. Five years on, it collected Ps542 million last year, an increase of more than 13 times during that period and 20% above the rental income received in 2004. MegaworldÆs flagship project, Eastwood City, accounted for the majority of the rental income with its Cyber One office building and City Walk 2 leisure strip both posting strong occupancy levels last year.
The company's cash and cash equivalent balance, at Ps2.85 billion, was 6%higher year-on-year, while the current ratio stood at 2.34:1. Total equity rose by 6% to Ps17.87 billion from Ps16.77 billion in 2004.
Megaworld continues to maintain a strong liquidity position with current assets amounting to almost Ps15 billion and a bank debt-to-equity ratio of 0.07:1.
The continued outperformance of the Philippine property market, especially in the Manila area, should translate into an even better performance for Megaworld.
In 2004, Megaworld earmarked Ps20 billion in capital expenditure to oversee the completion of a number of new landmark projects over the next four years: The Eastwood Parkview, a luxury twin tower, was completed last year; One Orchard Road, an upscale residential tower, opened itÆs doors earlier this year.
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