D&L’s maiden bond offer receives strong interest from investors, nearly 5x oversubscribed

Listed chemicals manufacturer D&L’s maiden bond offering received strong interest from fixed income investors as total bids received amounted to P13.8 billion.

In a disclosure to the Philippine Stock Exchange on Friday, D&L said the total bids received is equivalent to 4.6 times the base offer size of P3 billion.

With the robust demand from investors, the company is expecting the exercise of the oversubscription option of up to P2 billion.

Upon full exercise of that option, the issue size will increase to P5 billion, composed of a P3-billion bond with a tenor of three years and a P2-billion bond with a tenor of five years.

Interest rates were set at the tight end of the marketing range given the favorable response from investors, the company said.

The three-year issuance will carry a coupon or interest rate of 2.7885% per annum, while the five-year issuance will carry an interest rate of 3.5962% per year.

Philippine Rating Services Corporation (Philratings) rated the bonds PRS Aaa with stable outlook, the highest rating assigned by the agency.

D&L tapped China Bank Capital Corp. as the sole issue manager, lead underwriter, and sole bookrunner of the milestone bond offer.

The proceeds from the bond issuance will be used primarily to finance the company’s expansion plans in Batangas and the corresponding working capital requirements. Construction of the said plant started in late 2018 and commercial operations are expected to partially commence in May 2022, D&L said.

Total estimated capex for the said facility amounts to approximately P8 billion, with around P3.5 billion remaining to be spent.

“We are overwhelmed with the strong support the fixed income community has shown us in our debut bond issuance. This has allowed us to price our bonds at among the lowest rates in Philippine corporate bond history. This maiden offering will be a useful financial exercise for the company and will allow us to fully fund our Batangas expansion, which will be the next leg of growth for the company. We are looking forward to May 2022 when commercial operations finally start,” said D&L president & CEO Alvin Lao.

As of the first half of 2021, the company booked a net income of P1.395 billion, up 74% year-on-year as all of its business segments saw a significant recovery and have already reached pre-COVID levels.—AOL, GMA News