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Ask Your Advisor: Where do I reinvest the proceeds from my perpetual bonds?
With the recent decision of San Miguel Global Power to call on its 6.5% perpetual bonds, one investor was suddenly flush with cash. He wants to know what to do with the money.
By EA Aguirre
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On April 25, 2024, San Miguel’s SMC Global Power called on its 6.5% perpetual bonds, which are bonds with no maturity date. With perpetual bonds, the company just pays the interest to the holders of the bonds without paying back the whole amount borrowed.
However, the company now decided to call on the perpetual bonds and pay back what it borrowed from the bondholders and stop paying the interest.
This left some investors suddenly flush with cash. One investor called up and said, “Where do I invest my money now?”
Fortunately, there is no lack of opportunities. With the higher USD/PHP exchange rate, several local investors are expected to convert their proceeds back to Philippine pesos.
We see reinvestment opportunities in global credits and even local bonds. US Treasury yields are approach