Oversubscribed! This was the term used to describe the recent listing of Globe bonds by the Philippine Dealing and Exchange Corp. (PDEx).

Alberto de Larrazabal, Globe Chief Financial Officer:

“It was a little oversubscribed. This demonstrates the investors’ continued interest in Globe.”

Boring Details!

• The P5.5B seven-year bonds had a coupon rate of 6%, while the P4.5B five-year bonds carried a little less at 5.75%.

• The seven and five year bonds respectively mature in 2015 and 2017 (BPI Capital Corp., HSBC Corp. Ltd., and RCBC Capital Corp. served as underwriters for the issuance)

Alberto/Globe:

“We are keeping it to P10 billion even it was oversubscribed. We decided to limit it to that.”

Troll: Globe was allowed to issue up to P15B in fixed-rate bonds but chose to initially make do with ten.

Alberto/Globe:

“We still have P5 billion remaining and we will probably issue it toward the end of the year and use the proceeds for next year’s spending.”

Where Will the Money Go?

The generated funds will be used to fund an ongoing network modernization and IT transformation program, as well as to finance other CAPEX costs for the year (Globe projects to spend USD640M for 2012-2013).

Stuff You Won’t Understand!

For Q1 of 2012, Globe had a conservative figure for its gross debt-to-equity ratio which was pegged at 1.09:1, and gross debt-to-earnings before interest, taxes, depreciation and amortization (EBITDA) ratio at 1.48:1 which is well within its debt covenant of 2:1 and 3:1, respectively.

Also for Q1, consolidated service revenues grew to an all-time high of P20.2B while core net income was recorded at P2.7B.

Where Did Globe Bring Its Earnings for Q1?

Globe said that it re-invested a portion of its revenue gains on:

• Marketing and brand-building initiatives (for the general defense of its market position)

• Subsidy spend to acquire new subscribers (for postpaid, mainly, for the free handsets they get for high value plans)

• Retention (i.e. renewing postpaid contracts that are about to expire)