SMIC's P10-billion bonds get highest rating

MANILA, Philippines - SM Investments Corp.’s (SMIC) PRS Aaa rating for its outstanding P10-billion bonds was maintained by leading domestic credit watcher Philippine Rating Services Corp. (PhilRatings).

Obligations rated PRS Aaa, the highest rating on the PhilRatings scale, are of the highest quality with minimal credit risk. This means the obligor’s capacity to meet its financial commitment on the obligation is extremely strong.

In maintaining the rating, PhilRatings took into account SMIC’s diversified business portfolio which includes core companies with strong market positions, sustained earnings, and recurring cash flows; solid brand equity and experienced management team; strong liquidity; and sound capitalization.

The rating also considers the positive prospects for the Philippine economy, in general, and for industries where the SM Group has exposure, in particular.

SMIC, one of the largest conglomerates in the Philippines, is engaged in five core businesses through its subsidiaries and affiliates: shopping mall development; retail; financial services; real estate development and tourism; and hotels and convention centers.

Its flagship unit, SM Prime Holdings Inc., is the country’s largest shopping mall developer and operator with 37 malls nationwide as of end-May this year. The malls have a total gross floor area of 4.6 million square meters and average foot traffic of 2.5 million per day.

For this year, SM Prime is slated to open four malls, already including the Tarlac City mall which opened in April 2010. A fourth mall is likewise scheduled to open in China within the year.

SM Prime is also considering to create a real estate investment trust (REIT) to unlock the value of its mall assets, secure an additional source of capital, and to create value for its shareholders.

The retail business is considered the group’s “cash cow,” with its operations characterized as debt-free and providing good returns. As of May 31, 2010, it had a total of 37 SM Department Stores (the leading mass merchandiser retailer in the Philippines), 27 SM Supermarkets, 28 SaveMore stores, 19 SM Hypermarkets and 12 Makro wholesale outlets. More stores will be opened within 2010,while Makro outlets will eventually be converted to SM Hypermarkets.

SMIC’s banking arm, Banco de Oro Unibank Inc., has one of the largest distribution networks, with over 700 branch licenses and more than 1,200 ATMs nationwide.