ICTSI prices fixed-for-life perpetual securities

First Asean issuer ever to offer equity-accounted fixed-for-life senior perpetual securities in the international debt capital market

PHILIPPINE port operator International Container Terminal Services Inc (ICTSI) has raised US$400 million through senior guaranteed perpetual capital securities, representing the company’s first fixed-for-life transaction.

ICTSI initially priced on January 10 a US$350 million offering at par with a similar rate of distribution and re-offer yield of 5.875%. It then re-opened the books on January 11 for an additional tap of US$50 million, bringing the deal size to US$400 million.

The Reg S deal was structured to constitute equity under the International Financial Reporting Standards (IFRS). The transaction followed ICTSI’s four senior perpetual capital securities issuances, which have step-ups, priced between 2011 and 2016.

Consistent with the requirements for equity under IFRS, the issuer may resolve, at its sole discretion, to defer payment of distribution otherwise payable on a distribution payment date. The proceeds will be used to finance acquisitions and for capital expenditures, as well as for general corporate purposes.

The securities bring additional liquidity for ICTSI in the context of its growth strategy, and allow the company to further strengthen its practice of prudent capital management to better match its long-term port concessions.

The transaction is significant given ICTSI is the first Asean issuer ever to offer equity-accounted fixed-for-life senior perpetual securities in the international debt capital market.

ICTSI senior vice-president and chief financial officer Rafael Consing Jr says the deal is part of the company’s strategy of prudent and value accretive capital and risk management, while further extending the duration of its liabilities to be in line with its concessionary assets.

The unrated securities are issued through Royal Capital and guaranteed by ICTSI. On a consolidated basis, the bonds were distributed 75% in Asia, 13% in Europe and 12% in offshore US. By type of investors, fund managers accounted for 53%, private banks 27%, banks 13%, and insurance companies and pension funds 7%.

Citi, Credit Suisse and Standard Chartered acted as joint lead managers for the transaction.

ICTSI currently owns and operates a total of 31 container terminal facilities in 18 countries with a focus on facilities having total annual throughputs ranging from 50,000 to 2.5 million twenty-foot equivalent units (TEUs).