Local credit watcher Philippine Rating Services Corp. (PhilRatings) has kept its triple-A credit rating on San Miguel Brewery’s debt paper, noting that the recent increases in taxes on beer products won’t dampen the beer giant’s profit position and debt servicing capability.
In a statement, Philratings said it had maintained the “PRS Aaa” issue rating for SMB’s outstanding bonds totaling P45.21 billion with the following tranches: Series B worth P22.40 billion maturing in 2014; Series C worth P2.81 billion maturing in 2019; Series D worth P3.00 billion maturing in 2017; Series E worth P10.00 billion maturing in 2019; and Series F worth P7.00 billion maturing in 2022.
PRS Aaa, the highest rating assigned by PhilRatings, suggests that the rated securities are of the highest quality with minimal credit risk. The borrower’s capacity to meet its financial commitment on the obligation is deemed extremely strong.
In a statement, Philratings said the rating considered the following key factors: the company’s high cash from operations and profitability which comfortably support debt servicing; sustained financial flexibility and adequate capitalization; dominant market position domestically; experienced management and production team, with technical support from Kirin Holdings; and stable inflationary environment and robust consumer spending.
The rating also considered changes in the tax regime on alcoholic beverages implemented last January 1, 2013.
SMB is the long-time leader in the Philippine beer industry, with a reported estimated market share of 96.8 percent as of end 2012. It has five breweries which produce its line up of well known brands including, San Miguel Pale Pilsen, Red Horse Beer and San Mig Light. These are brought to retail outlets through an extensive and efficient distribution system.