LOCAL DEBT watcher Philippine Rating Services Corp. (PhilRatings) maintained the PRS Aaa rating for Cyberzone Properties, Inc.’s (CPI) outstanding P6-billion bond issue, which is set to mature in January 2023.

In a report Tuesday, PhilRatings said the wholly owned subsidiary of Filinvest Land, Inc. (FLI) received the highest credit rating with a stable outlook as its 5.5-year bond issuance is likely to remain unchanged in the near term.

“Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong,” it said.

PhilRatings said the funding generated from the bonds of CPI were used to finance its capital expenditure needs for existing and ongoing building projects. Among these are Vector Three, Filinvest Axis Towers 1 and 2, and Phase 1 of Axis Parking for those completed as of March, and Filinvest Axis Tower 3 and Filinvest Cebu Cyberzone Towers 3 and 4 for those under construction.

The debt watcher said its credit rating on CPI took into consideration the continuously growing office portfolio of the company that maintains high occupancy rates.

“As of end-March 2019, CPI had a total GLA (gross leasable area) of 382,422 square meters (sq.m.). This is expected to further increase to 522,081 sq.m. by 2020 as CPI completes buildings currently under construction and for future construction. All of the company’s operational buildings are reportedly almost fully leased,” it said.

It added that CPI’s office buildings are mostly located in special economic zones, which allow it to avail of various fiscal and non-fiscal incentives, on top of its competitive rental rates in its spaces in Makati and Bonifacio Global City.

“These benefits make CPI’s office portfolio more attractive to foreign companies, giving CPI a competitive advantage over other developers,” PhilRatings said.

The company’s consistently strong margins and its manageable liquidity was also considered by the debt watcher, noting CPI’s net income grew 19.2% to P1.4 billion last year.

“CPI consistently recorded strong margins with EBIT (earnings before interest and tax) margin and net profit margin in 2018 at 73.3% and 59.9%, respectively… CPI expects its profitability to continue its growth trajectory in the next two years, supported by the expected full occupancy of its newly completed buildings and the stable full occupancy of the rest of its operational buildings,” PhilRatings said.

It also noted the growing office leasing industry in the country as one of its reasons to award CPI the PRS Aaa rating, saying the business process outsourcing (BPO) and Philippine Offshore Gaming Operators (POGO) industries are expected to rise this year, which in turn will benefit CPI’s office leasing business. — Denise A. Valdez

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