Globe Telecom bonds get top credit rating

Globe Telecom maintained the top credit rating for its P17 billion worth of bonds, according to Philippine Rating Services Corp. (PhilRatings).

PhilRatings said in a statement that its PRS Aaa issue credit rating was assigned to Globe’s debt, signaling a healthy balance sheet, good business prospects and minimal risk of default.

It said the outstanding bonds consisted of P10 billion bonds issued in June 2012, with P4.5 billion due in 2017 and P5.5 billion due in 2019, and P7 billion bonds issued in July 2013, with P4 billion due in 2020 and P3 billion due in 2023.

In its statement, PhilRatings said it considered Globe’s sustained profitability, “solid” market position with “strong brand recognition”, new product offerings and the favorable industry outlook.

Globe is one of two of the country’s major providers of mobile communication, fixed line telephony and broadband services. It has about 61.3 million mobile subscribers, 1.1 million home broadband subscribers and 1.2 million landline subscribers, including those from its subsidiary, Bayan Telecommunications Inc. (Bayan).

It had a 48.7-percent share of the mobile market as of June this year, compared to 44.9 percent at the end of 2015.

The report also cited Globe and rival PLDT’s recent joint acquisition of San Miguel Corp.’s telecommunications unit for close to P70 billion. The main target was SMC’s valuable radio frequencies, which remained unused for years.

The SMC deal, however, lured the scrutiny of the antitrust body Philippine Competition Commission (PCC) due to its implications to the telco competitive landscape.

“Given Globe’s solid financial performance and standing and even with the pending issue in relation to the PCC, PhilRatings has assigned a rating outlook of stable to Globe’s credit rating,” PhilRatings said. “The encouraging growth prospects for the Philippine economy are seen to bode well for Globe’s well-positioned and growing businesses.”

From Aug. 8 to Sept. 5, 2016, Globe launched a consent solicitation exercise relating to its outstanding P17 billion in fixed-rate bonds, which are set to mature in 2017, 2019, 2020 and 2023.

The purpose was to seek the bondholders’ consent for its proposed amendment to maintain a higher limit of consolidated debt to equity of 2.5:1 (from the existing limit of 2:1) and to align debt to equity definitions with current Philippine Financial Reporting Standards.