SMC’s P30B upcoming bond offer gets triple A rating

Conglomerate San Miguel Corp. plans to raise as much as P30 billion from a new retail bond offering.

Local credit watcher Philippine Rating Services Corp.(PhilRatings) has assigned a triple-A rating on this new issuance, which represents the third tranche of SMC’s three-year debt securities program of up to P60 billion. The rating has a “stable” outlook.

Obligations rated PRS Aaa are deemed of the “highest quality with minimal credit risk.” The obligor’s capacity to meet its financial commitment on the obligation is deemed “extremely strong.”

A “stable” outlook, on the other hand, indicates that the rating is likely to be maintained or to remain unchanged in the next 12 months.

Philratings said the issue rating considered that SMC’s operating businesses were providing sustainable income streams and cash flows, and were seen to strengthen further with the expected completion of projects in the energy and infrastructure businesses.

The rating agency also noted SMC’s “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” adding these were made SMC “well-prepared for significant future growth.”

Philratings also cited SMC’s experienced management team, which allows the company to “create and execute a sound growth strategy.”

Originally founded in 1890 as a single brewery in the Philippines, Philratings noted that SMC had transformed itself from a market-leading beverage, food and packaging business with a globally recognized beer brand, into a diversified conglomerate with market-leading businesses in the fuel and oil, energy, infrastructure, and additionally, an investment in banking.

“SMC owns a portfolio of companies that is tightly interwoven into the economic fabric of its home market, benefiting from and contributing to, the development and economic progress of the Philippines,” it said,

The portfolio of products includes beer, liquor, non-alcoholic beverages, poultry, animal feeds, flour, fresh and processed meats, dairy products, coffee, various packaging products and a full range of refined petroleum products. Most of these products are market leaders in their respective markets.