SMIC retains top credit score for its P25-B bonds

MANILA, Philippines - Mall and banking conglomerate SM Investments Corp. (SMIC) has retained the top credit score for its P25 billion existing bonds.

Local debt watcher Philippine Ratings Services Corp. (Philratings) said it maintained the PRS Aaa  rating for the fixed-rate bonds of SMIC given the holding firms strong growth prospects.

“Obligations rated PRS Aaa are of the highest quality with minimal credit risk,” Philratings said.

“The obligor’s capacity to meet its financial commitment on the obligation is extremely strong,” it added.

The PRS Aaa scores were assigned to the P9 billion Series A bonds due 2014, P1 billion Series B bonds due 2016, P6 billion Series C bonds due 2019 and P9 Billion Series D bonds due 2022.

Philratings said “SMIC’s solid financial profile backed by strong liquidity and a sound capital structure; its clear growth strategy supported by solid brand equity; and its core companies with very strong market positions,” were the factors considered in retaining the rating.

It also took into account the favorable outlook for the industries of SMIC’s core businesses,” as these industries are expected to continue to benefit from the still positive, albeit possibly muted growth of the domestic economy given recent calamities experienced in the Philippines.”

SMIC is the flagship holding company of country’s richest man Henry Sy. It is into shopping malls and property development  (SM Prime Holdings Inc.), retail (SM Retail Inc.) financial services (BDO Unibank Inc. and China Banking Corp.), and hotels and conventions (SM Hotels and Conventions Corp.).

Philratings said SMIC’s liquidity outlook is still favorable as operating cash is expected to remain positive while debt levels will continue to be well managed.

For its growth prospects, Philratings said SMIC’s expansion program has been aggressive but is still focused on keeping market leadership and maximizing synergies within the conglomerate.

“The Group continues to look for opportunities and acts accordingly when these opportunities arise,” the credit rater said.

In January to September, consolidated earnings of SMIC rose 14 percent to P18.46 billion, powered by the group’s banking and mall businesses. The latest data allowed SMIC to remain on track to meet its income target of 12-14 percent growth this year.

Philratings said its credit score is based on available information and projections at the time that the rating review is ongoing.

“PhilRatings shall continuously monitor developments relating to SMIC and may change the rating at any time, should circumstances warrant a change,” it added.