MANILA, Philippines - SM Investments Corp. (SMIC) successfully launched and priced five-year $250 million convertible bond (CB), the first issuance by a Philippine company in 2012.

In a statement on Friday, the company said the CB offering attracted investors from Asia and Europe.

The issue was offered in a Reg-S format and was structured as an accelerated bookbuild. The bonds feature a coupon of 1.625% and yield to maturity of 2.875% per annum with a conversion premium of 20%.

"This landmark transaction provides SMIC with attractive, low cost financing, while achieving a conversion price at a premium to the current share price," the comapny said.

SMIC will use the proceeds of the offering for general corporate purposes and the refinancing of existing debt.

Joint bookrunners of the SMIC issue are Citigroup and J.P. Morgan.

SM Investments, owned by the country's richest man Henry Sy, follows Taiwanese technology companies Wistron Corp and Pegatron Corp, which raised a combined $480 million the past weeks in convertible bonds to fund expansion.  

Investment banks are counting on convertible bond issuance in 2012 to help ease the downturn in equity capital markets in the Asia Pacific caused by a decline in initial public offerings.

Convertible bonds (CBs) are a type of hybrid security that can offer a fixed rate of return and be exchanged for stock if the bonds trade above the conversion price.   

They can be a cheaper way for companies to raise funds than regular bonds, while offering assurance that dilution will only occur at the conversion premium. For investors, convertibles offer some downside protection because of their fixed-income nature.  -- With Reuters