Dominican Republic’s top bank, hotel group announce US$100M bond
Santo Domingo.- Spanish company Meliá Hotels International and Dominican Republic Popular bank group on Wednesday announced the hospitality industry’s first corporate bond issue in the country, structured and distributed by the bank’s stock broker Inversiones Popular.
The amount of the program, which will be structured in successive issues on demand of the hotel, could top US$100.0 million, Efe reports, quoting sources of Dominican Republic’s biggest bank group, which makes its first issue in dollars.
Dominican Republic’s National Securities Council approved the corporate bond program on March 3, whose emitter is the Meliá group subsidiary in the country, "Desarollos Sol, SA," owner of the hotel Meliá Caribe Tropical, in Bavaro-Punta Cana.
Earnings from the bond will be primarily used to support the hotel group’s investment programs in the Dominican Republic.
The bond is aimed at institutional investors and the general public, placed in 10 sections of US$10 million each, for a period of 365 days.
The bond maturity is five years from issue date of each stage, with a fixed interest rate, paid monthly or quarterly of interest and one-time repayment of principal when the emission matures in 2020.
This bond, whose minimum investment is 30 dollars, has an "innovative" warranty structure because it counts with the benefits of Dominican Republic’s Mortgage Market Development and Trust Law 189-11, and backed by a trust managed by Popular subsidiary, Fiduciaria Popular .
The trust will manage the Melia Caribe Tropical real estate collateral, along with a bank account to ensure payment of the next coupon, said a source.
The bond program also includes total joint guarantee by Meliá Hotels International that it will be liable for all amounts of principal, interest and any other amounts that may be owed to investors.
Rating agencies have given "elevated" solvency for the issue: AAA (dom) by Fitch Ratings, and AA (dom) by Feller-Rate.
"This new offering of a major tourism bond is an opportunity for local and international investors to diversify, in addition to further boost the Dominican tourism sector as one of the country’s most important pillars for sustainable development," said the Efe sources
Founded in Palma de Mallorca, Spain in 1956, Meliá Hotels International is one of the world’s biggest hotel chains, with more than 370 hotels operating or about to open in more than 40 countries, investing over US$1.0 billion since arriving in the Dominican Republic.