Manila Water Company, one of the major water concessionaires in the Philippines, debuted in the international debt capital markets as it priced on July 23 a US$500 million sustainability bond. This is the single largest green, social or sustainability bond issued by a listed private water utility in Asia and the first Asean sustainability bond by a corporate issuer out of the Philippines.
The Reg S 10-year non-call five-year bond was priced at 99.002% with a coupon of 4.375% to offer a yield of 4.50%. This was in line with the final price guidance and 25bp inside the initial price range of 4.75% area.
Manila Water has recently established a sustainable financing framework with DNV GL providing a second party opinion. The framework is aligned with Green Bond Principles 2018 and Social Bond Principles 2018, while complying with the Asean Sustainability Bond Standard.
Net proceeds from the bond issue are intended to refinance debt and fund programmed capital expenditures for 2020-2021, pursuant to the sustainable financing framework. The projects covered include sustainable water and wastewater management, terrestrial and aquatic biodiversity conservation and affordable basic infrastructure.
“The issuance of the sustainability bond is fully aligned with our commitment to create shared value towards achieving the targets of the UN Sustainable Development Goals (SDGs), especially SDG 6, which focuses on clean water and sanitation,” says Manila Water president Jose Rene Gregory Almendras.
Manila Water CFO and treasurer Ma Cecilia Cruzabra adds: “The bond issuance will support financing of important water and wastewater infrastructure projects in our communities in the East Zone, which have been agreed with the regulators, and which will provide stable and predictable cashflows. The issuance will also allow us to refinance out maturing obligations, further diversify our funding sources and lengthen our maturity profile.”
The deal generated a final order book of US$1 billion – reaching a peak of nearly US$1.96 billion – from 85 accounts, with 79% of the bonds distributed in Asia and 21% in Europe. By type of investors, fund managers bought 57% of the paper, private banks 19%, insurance companies 14% and banks 10%.
BPI Capital Corporation, Citi, Credit Suisse, HSBC, Mizuho Securities and UBS were the joint bookrunners and lead managers for the transaction.
Manila Water holds the exclusive right to provide water and wastewater services to the eastern side of Metro Manila in the Philippines under a concession agreement entered into with the Metropolitan Waterworks and Sewerage System in 1997. Outside of the Philippines, Manila Water’s operations include investments in Vietnam, Thailand and Indonesia.
Manila Water is listed in the Philippine Stock Exchange with a market capitalization of 26.7 billion pesos (US$540.50 million) as of July 23 2020.