Low-risk investment: Manila Water’s 8.25% fixed rate bonds

If you missed the Retail Treasury Bond offering of the Philippine government back in July this year which offered 8.5% and 9.0% interest per annum, you currently have a chance to earn a similar amount of return at the same low level of risk through Manila Water’s 8.25% fixed rate bonds.

The Php 3 billion corporate bond issue pays a fixed coupon rate of 8.25% per annum. The interest are paid quarterly or every 3 months. The bonds mature in October 2013 but investors can redeem their investments by as early as October 2011.

Manila Water Corporation (PSE Stock Code: MWC), owned by Ayala Corporation which in turn is owned by the richest family in the Philippines, holds the water concession for the eastern zone of Metro Manila. Proceeds from the issuance will be used to finance water expansion projects in the East Zone. The bonds were given the highest rating of “PRS Aaa” by PhilRatings, which means the bond issue is deemed to have a low risk of default.

Minimum investment is Php 50,000 with increments of Php 10,000. To avail of this investment, try contacting Bank of the Philippine Islands Capital Corp. (BPI Capital) or Banco de Oro Capital Corp. (BDO Capital). 

If you’re thinking of investing in these fixed rate bonds, do it quickly because this Manila Water offer is from today, October 13, until October 17 only.

4 thoughts on “Low-risk investment: Manila Water’s 8.25% fixed rate bonds”

  1. how come BDO Julia Vargas is not aware of this issuance? Anyone there who knows of a bank branch who serves this bond? thanks

  2. Manila Water supplies the water requirements east zone of Metro Manila. There is reasonable certainty that the interest rates of 8.5% can be adequately covered by the business in view of monopoly like nature of this business. Consumers cant just switch to another provider if youre in their zone concession. They are allowed to recover their investments + an adequate return by the regulator MWSS similar to toll fee increases.We like this business for its stability and predictable earnings stream . The better buy is the common stock by the way, as it gives dividends and potential capital appreciation.If you bought at IPO price of 4.0 Pesos in 2006 . the price is now 21. A 700% return over a 5 year period. and of course you get dividends twice a year. The risk in inveting in bonds is the inflation. but an 8.5% rate is pretty good . 

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