THE mall operating arm of the SM group has secured the top credit rating for a bond issue of up to P25 billion, Philippine Rating Services Corp. (PhilRatings) said.

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“The credit rating for SM Prime Holdings, Inc.’s (SMPH) proposed bond issue of P15 billion, with an oversubscription option of up to P10 billion, is PRS Aaa,” PhilRatings said in the statement.

PhilRatings deems obligations rated PRS Aaa to be “of the highest quality with minimal credit risk.”

Reports have estimated a timetable for the bond issue of as early as August, with the proceeds going towards expansion and land banking.

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

The agency said the ratings reflect “SMPH’s established brand name and operational track record, enhanced by synergies among the SM Group of companies; the positive outlook across its core business segments, supported by strong macro-economic fundamentals; SMPH’s highly experienced management, with strong expertise in property development and investment risk management; and its solid financial profile, characterized by sound liquidity, stable profitability and a conservative capital structure.”

PhilRatings said the consolidation of SM’s real estate properties made SMPH one of the biggest integrated developers in the country, and its “strong position domestically” is further strengthened by its growing mall operations in China.

“SMPH continues to leverage the SM Group’s well-established brand franchise and synergies realized among companies within the Group,” it said.

SM Prime’s consolidated net income rose 11% to P4.58 billion in the first quarter, with consolidated revenue up 3% to P15.35 billion.

Rental revenue accounted for 56% of consolidated revenue and grew 12% to P8.56 billion, mainly due to new malls that opened in 2012 and 2013.

Real estate sales contributed a third to total revenue at P5.02 billion, while the “other” category was responsible for 11% at P1.77 billion.

“With the strong economic prospects for both the Philippines and China, and the continued construction, expansion and launching of its projects, SMPH’s net earnings are expected to remain robust going forward,” PhilRatings said in the statement.

Last month, SMPH opened SM City Cauayan in Isabela province – its first mall in the Cagayan Valley region.

This year, the firm will also open SM Center Angono in Rizal with a gross floor area (GFA) of 33,094 sq.m. and SM City Zibo in China’s Shandong province with a GFA of 154,000 sq.m.

It also plans to expand SM City Bacolod and SM Lipa and expects the launch earlier this year of SM Mega Fashion Hall at SM Megamall in Mandaluyong City that increased this mall’s GFA to 506,435 sq.m.

SM Prime’s subsidiaries are First Asia Realty Development Corp., Premier Central, Inc., Consolidated Prime Dev. Corp., Premier Southern Corp., San Lazaro Holdings Corp., First Leisure Ventures Group, Inc., Southernpoint Properties Corp., Mega Make Enterprises Ltd., Affluent Capital Enterprises Ltd., SM Land (China) Ltd., and Springfield Global Enterprises Ltd. — Daphne Magturo