SMC gets top credit rating for P30-B fixed-rate bonds

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DIVERSIFIED conglomerate San Miguel Corp. (SMC) secured the highest credit rating for its planned P30-billion fixed-rate bond issuance, a local debt watcher said. 

In a statement released Tuesday, the Philippine Rating Services Corp. (PhilRatings) said it has assigned a PRS Aaa issue rating for SMC’s proposed bond offering. This represents the highest rating in the debt watcher’s credit rating scale, indicating the company’s ability to meet its financial obligations.

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

The P30-billion fixed-rate bonds is the third tranche of SMC’s three-year debt securities program of up to P60 billion. The first tranche worth P20 billion was listed at the Philippine Dealing and Exchange Corp. on March 1, 2017, which consisted of P6.68-billion bonds due 2022 at 4.8243% per annum, P7.29 billion due 2024 at 5.2840%, and P6.022 billion due 2027 at 5.613%.

The second tranche of the debt securities program, meanwhile, was launched on April 7, 2017, where SMC raised P10 billion from the sale of five-year bonds at 5.1923% per annum.

The bond issuances are among SMC’s refinancing activities in an effort to temper the company’s foreign exchange losses, as the Philippine peso is expected to continue its depreciation. On Tuesday, the local currency depreciated by 23.5 centavos to close at P51.420 against the dollar.

PhilRatings considered SMC’s operating businesses, income streams, and cash flows in coming up with the credit rating. The company booked a net income of P20.9 billion in the first nine months of 2017, following a 20% increase in revenues to P597 billion during the period. 

The debt watcher said SMC’s financials are expected to further improve with the completion of projects in the energy and infrastructure sector.

PhilRatings also noted the strength of SMC’s core businesses in food and beverage, fuel and oil, and infrastructure. The company’s subsidiaries also include investments in energy and packaging. 

“SMC and its subsidiaries’ strong market position, its solid track record and continuous efforts to manage its debt position, backed by growing market demand and supported by a robust domestic economy, makes SMC well prepared for significant future growth,” according to PhilRatings.

Established originally as a single brewery in the Philippines in 1890, SMC now has over 100 production facilities in the Asia-Pacific region, employing more than 23,000 employees. Amid its diversified product offerings, SMC President and Chief Operating Officer Ramon S. Ang last year announced his intention to enter the electronics business in the future.

Shares in SMC rose 90 centavos or 0.63% to close at P144.90 each at the Philippine Stock Exchange on Tuesday. — Arra B. Francia