SM Prime readies P10-billion bond issuance

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SM PRIME Holdings, Inc. plans to issue P10 billion worth of bonds this year, which were given the highest rating by a local debt watcher.

In a statement issued Thursday, Philippine Rating Services Corp. (PhilRatings) said it assigned a PRS Aaa rating for SM Prime’s planned issuance. This indicates that the SM Prime’s debts are of the highest quality with minimal risk, with the company having an “extremely strong” capacity to meet its financial obligations.

PhilRatings also gave the rating a stable outlook, which means that it is unlikely to change in the next 12 months.

The bonds to be issued represents the fourth and last tranche of SM Prime’s three-year shelf registration program worth up to P60 billion approved by the Securities and Exchange Commission in July 2016.

The listed property developer earlier said it will spend an average of P80 billion in capital expenditures (capex) this year, in order to support its provincial expansion and land banking efforts.


PhilRatings took into account SM Prime’s leading market position, well diversified portfolio, continuous construction and expansion efforts, as well as its management’s “solid track record and focused implementation of strategic priorities.”

“Over the projected period, profitability will remain stable. The increase in revenues will continue to be driven by rental income, coupled with strong real estate sales…Housing demand, from both local and foreign buyers, is anticipated to remain buoyant, going forward,” according to PhilRatings.

SM Prime’s net income jumped 17% to P32.2 billion in 2018, following a 14% increase in consolidated revenues to P104.1 billion. The Sy-led firm benefited from its mall expansion into provincial areas, alongside its continued development of residential condominiums in Metro Manila.

The company ended the year with a total of 72 malls covering 8.3 million square meters (sq.m.) of gross floor area in the country. It operates another seven malls spanning 1.3 million sq.m. in China.

SM Prime will further expand its mall operations with four scheduled openings this year, namely SM Center Dagupan, SM City Olongapo Central, SM City Butuan, and SM Minpro Citimall. It will also expand SM City Baguio by 32,000 sq.m. and SM City Fairview by 46,000 sq.m.

Shares in SM Prime slipped 0.13% or five centavos to close at P38.65 each at the stock exchange on Thursday. — Arra B. Francia