Stock Commentary: AboitizPower applies to SEC for 2nd tranche of shelf-registered bonds worth P12 B

The power generation arm of the Aboitiz Family said that it intends to sell up to P12 billion worth of bonds from its P30 billion shelf registration and that it would conduct the sale in Q4 of this year in “one or two series.”

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AboitizPower [AP 31.00 4.03%] will use the money raised to refinance the 2020 Series E bonds that it issued, which are scheduled to mature in 2022.

Whatever is left over will be applied to “partially fund the equity contributions for the construction of the 74-MW solar power plant in Pangasinan province, general corporate purposes, and other future renewable projects.”


MB BOTTOM-LINE

Debt management isn’t sexy, but it’s the kind of thing that helps the bottom line and works to prevent cash-flow problems.

AP is doing the corporate finance version of what people all over the world do as part of their personal finance system: identify high-interest debt, and pay it off with cash or with debt that was signed at a lower interest rate. It’s the functional equivalent of taking out a personal loan of P40k at 7.5% interest to pay off the P40k balance of an older personal loan that has an interest rate of 8.5%.

AP also has the chance to make some small adjustments to the terms of the bond that might be more beneficial to it as compared to the prevailing terms of the bond that will be paid off. As I said, debt juggling isn’t front-page material, but it is a fact of life for infrastructure companies and utilities.

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