SMIC retains top credit rating for P28-B outstanding bonds

MANILA, Philippines - Local debt watcher Philippine Rating Services Corp. has maintained the highest credit grade of triple A on SM Investments Corp.’s P28.3 billion outstanding bonds.

Bonds rated PRS Aaa suggest they are of highest quality with minimal credit risk.  The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.

In a statement, Philratings said the assessment reflected SMIC’s solid financial profile, backed by strong liquidity and sound capital structure; its clear growth strategy, supported by its solid brand equity; and core companies with very strong market positions, sustained earnings and recurring cash flows. 

In maintaining the rating, Philratings also took into consideration the favorable outlook for the industries of SMIC’s core businesses, which are expected to continue benefit from the strong growth of the domestic economy.

 SMIC’s liquidity remained strong, with current ratio improving to 1.9 times as current liabilities declined by 27.1 percent to P96.3 billion as of the end of 2014. 

PhilRatings said SMIC’s short-term debt of P24.6 billion was amply covered by cash and cash equivalents of P69.1 billion, as of end-December last year. 

SMIC’s Internal cash generation is expected to remain robust, due largely to recurring revenue streams from the group’s growing mall, office and hotel portfolios. 

Liquidity is further supported by the group’s access to credit facilities from various domestic and foreign financial institutions, Philratings said.

“Growth has been aggressive, but is also well-managed among companies within the SM Group.  Each core business has set well-defined strategies, aimed at keeping market leadership while also maximizing synergies within the group,” Philratings said.

“Philratings believes the solid franchise of the SM brand will continue under the leadership of the second-generation Sys, who remain strongly guided by the same work ethics and business principles of their father, Henry Sy Sr. Well-qualified, non-family member professionals also provide competent support in the day-to-day transactions of the SM Group’s several businesses,” the local debt watcher said.

As of the end of the first quarter, SM Retail had 279 stores nationwide:  50 SM Stores, 40 SM Supermarkets, 120 SaveMore stores, 43 SM Hypermarkets, and 26 Waltermart stores. 

Shopping mall giant SM Prime Holdings Inc. has more than 50 malls across the country with a total gross floor area of over 6.5 million square meters.

Residential developer  SM Development Corp. added 5,215 residential units to its portfolio in 2014.  It has a landbank of 174.5 hectares,  providing ample room for future expansion. 

Banking arm Banco de Oro Unibank was the country’s largest bank in terms of assets (P1.9 trillion, equivalent  to a market share of 17 percent) as of end-December last year.  It has one of the largest distribution networks, with 876 operating branches, 30 international offices and more than 2,500 automated teller machines (ATMs) nationwide, as of end-2014.