SM PRIME Holdings, Inc. received the highest credit rating from Philippine Rating Services Corp. (PhilRatings) for the maximum P10 billion worth of bonds it plans to issue in July.
In a statement issued Thursday, the debt watcher said it assigned a “PRS Aaa” score with a “stable” outlook to the proposed fixed-rate retail bonds with maturity of 10 years. 
 
SM Prime will issue P5 billion worth of bonds in the primary offering with an oversubscription option for another P5 billion. 
 
The bonds form part of P60 billion worth of offerings programmed over the next three years. The company is looking to sell the first P10 billion by July. 
 
PhilRatings also maintained the PRS Aaa rating for SM Prime’s outstanding bonds amounting to P39.99 billion. It assigned a “stable” outlook on the credit score.
 
PRS Aaa signifies minimal credit risk and “extremely strong” capacity of an issuer to meet its financial commitments. 
 
A stable outlook, meanwhile, indicates that the rating will likely remain unchanged in the next 12 months. 
 
PhilRatings said the rating given to the SM Prime bonds mainly reflect the company’s “strong” financial profile; “solid” brand equity and “very good” operational track record; and “well-diversified” portfolio.
 
The credit rating agency also cited as a key consideration the “continuous aggressive” construction and expansion of development projects, which are expected to drive the company’s growth moving forward. 
 
“The consolidation of SM’s real estate properties made (SM Prime) one of the biggest integrated developers in the Philippines,” the credit ratings agency noted. 
 
SM Prime operates four core businesses: malls, residential, commercial and hotel and convention centers. At end-March, the company has 56 malls across the country and six others in China. 
 
In the first quarter of the year, SM Prime’s net profit amounted to P5.8 billion or barely half the P12.63 billion booked a year earlier.
 
The decline, however, was attributed to the P7.4 billion one-time trading gain on marketable securities that inflated the company’s bottom line in the first three months of 2015.
 
Excluding extraordinary items, SM Prime’s net income would have increased 12%, following a 10% year-on-year rise in consolidated revenues to P18.2 billion from P16.7 billion. 
 
“Over the projected period, earnings will remain robust,” PhilRatings said. 
 
“Revenues will still be driven by the strong rental fees coming from its mall operations as SM (Prime) continues to expand, construct and open more malls. Rental fees will continue to account for the bulk of total revenues.”
 
SM Prime closed 10 centavos or 3.59% lower at P24.20 in Thursday trading.