SMC Global bonds breach ₧30-B goal on high demand

SMC Global Power Holdings Corp. (SMCGP) has raised P40 billion from the listing of its fixed rate bonds on the Philippine Dealing and Exchange Corp. (PDEX), the largest corporate bond issuance to date.

The power unit of conglomerate San Miguel Corp. (SMC) said last Tuesday that the bond offering was initially targeted to raise P30 billion. However, the strong demand from investors and confidence on the company’s ability to continue providing reliable power nationwide prompted it to exercise its oversubscription option of up to P10 billion.

“The funds provided by these bonds come at an opportune time as we continue with our commitment to provide the country with reliable power supply, amidst present challenges in the global fuel market,” SMC President and CEO Ramon S. Ang said.

The debt papers comprise the first tranche of SMCGP’s P60-billion shelf-registered peso retail instruments consisting of: Series K Bonds, with an interest rate of 5.9077 percent per annum due in 2025; Series L Bonds, at 7.1051 percent per annum due 2028; and, Series M Bonds, at 8.0288 percent per annum due 2032.

“SMC Global Power fully supports the government’s thrust in powering the nation, as we continue to pursue business and expansion strategies that are aligned with our national and regional energy policies and needs demonstrating our commitment to conduct business operations in a socially and environmentally responsible manner,” Ang added.

The CEO said SMC’s power unit remains on track with plans to minimize the country’s dependence on coal, as part of the conglomerate’s larger sustainability goals.

“Right now we’re facing an unprecedented situation; but even as we work to maintain reliable and sufficient supply throughout this crisis, we are also very much focused on continuing our transition to cleaner and renewable fuel sources, without compromising on supply, quality, and affordability,” Ang said. 

The conglomerate is currently working on a group-wide sustainability roadmap that will include major targets for its power business to achieve a sustainable energy future.

And added that as part of its transition strategy, SMCGP last month completed putting up a 500-megawatt hour (MWh) of installed power storage capacity coming from new battery energy storage system, or “Bess,” facilities being installed nationwide.

By the end of this year, SMCGP expects to bring total battery capacity to 700 MWh and 1,000 MWh by the end of 2023 once all 32 Bess facilities come online. This is the very first and largest battery network in the Philippines by far.

Ang said the Bess network will be key to ensuring reliable power supply nationwide, even in far-off areas. It is designed to minimize wastage by storing and redistributing excess capacity to ensure even underserved regions can have the same sufficient, reliable electricity enjoyed by larger cities.

“With this, provinces and regions will have equal access to power, and therefore, an equal chance to attract investors,” Ang said. “Bringing electricity to power-challenged regions will help uplift the lives of more Filipinos, who will finally have access not just to basic electricity, but also opportunities and jobs brought about by electrification.”

SMCGP’s Bess facilities are also crucial to wider use of renewable energy in the country.

“Currently, the main challenge of renewables is intermittence, or the unreliable nature of renewable sources such as wind, solar, and hydropower. Battery technology will enable renewable capacity to be stored, ready to be deployed even when solar or wind farms or hydropower plants are down,” Ang explained.

SMCGP, which previously said it would no longer pursue new coal power investments, is also planning to increase capacities coming from cleaner fuel sources as well as renewables.

The firm is also investing in new liquified natural gas (LNG) plants, utilized by developed countries as a cleaner “bridge” fuel that facilitates an exit from coal, and transition to renewables. The company is also putting up additional solar and hydropower plants.