THE Philippines’ largest food service company, Jollibee Foods Corporation, returned to the US dollar bond market for the second time this year, raising a dual-tranche offering totalling US$600 million. To be used for general corporate purposes, the proceeds are intended as a precautionary measure from the unforeseen eventualities that may be caused by the Covid-19 pandemic, as well as to finance the initiatives of the company and its subsidiaries.
The unrated Reg S only deal was equally split at US$300 million each, with the five-year tranche priced at 99.996% with a similar coupon and re-offer yield of 4.125%. This was 25bp tighter than the initial price guidance of 4.375% area. The other tranche was for 10 years, which was priced at par with a similar coupon and re-offer yield of 4.75%. This was also 25bp inside the initial price guidance of 5.00% area.
Issued through Jollibee Worldwide Pte Limited, the bond offering was the company’s second international debt transaction this year following its inaugural issuance of US$600 million senior perpetual capital securities in January. This was likewise the third time Jollibee has accessed the capital markets since its initial public offering in 1993.
While the fund raising was done as a precautionary measure against the impact of Covid-19, Jollibee has sufficient cash of US$522.3 million equivalent as at March 31 and liquidity to support its operations on a continuing basis and meet all its obligations, the company says in its disclosure to the Philippine Stock Exchange.
The deal generated a combined order book in excess of US$1.6 billion from 84 accounts. In terms of geographic distribution, the five-year bonds were sold mostly in Asia at 89%, while the remaining 11% were distributed in EMEA. By type of investors, asset and fund managers were the biggest buyers with 47%, followed by banks with 44%, and private banks and other investors 9%.
Asia also accounted for the bulk of the 10-year bonds with 81%, while the other 19% was allocated in EMEA. Asset and fund managers bought 51% of the paper, banks 29%, and private banks and other investors 20%.
Citi, Goldman Sachs, J.P. Morgan and Morgan Stanley acted as joint global coordinators for the transactions, as well as joint bookrunners and lead managers along with BPI Capital Corporation, Credit Suisse and UBS.
In 2019, Jollibee reported a 14.4% drop to 6.33 billion pesos (US$126.35 million) in attributable net profit from 7.4 billion pesos a year earlier amid its new brand acquisitions. Gross sales went up 15% to 243.79 billion pesos, but higher operating costs impacted the company’s bottom line.
In July last year, Jollibee acquired Coffee Bean & Tea Leaf for US$350 million.