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SM Prime to issue P10-billion bonds

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By James A. Loyola

SM Prime Holdings, Inc., one of the largest integrated property developers in Southeast Asia, is planning to raise P10 billion from the issuance of bonds representing the fourth and last tranche of its three-year Debt Securities Program (DSP) of up to P60 billion.

Philippine Rating Services Corporation (PhilRatings) said it has assigned the highest issue rating of PRS Aaa to SM Prime’s proposed bond issue with a Stable outlook. Obligations rated PRS Aaa are of the highest quality with minimal credit risk.

The obligor’s capacity to meet its financial commitment on the obligation is extremely strong. A Stable outlook indicates that the rating is likely to be maintained or to remain unchanged in the next 12 months.

PhilRatings said the issue rating reflects SMPH’s strong financial profile; its solid brand equity, with a strong operational track record; and the company’s well diversified portfolio, with business segments and developments that complement each other.

The rating also considered the company’s continuous construction and expansion of development projects, leading to significant growth and cash flows going forward; and management’s solid track record and focused implementation of strategic priorities.

Over the projected period, PhilRatings said SM Prime’s profitability will remain stable. The increase in revenues will continue to be driven by rental income, coupled with strong real estate sales.

Rental fees will continue to account for bulk of revenues, while revenue contribution from real estate sales will increase as project completions during the period translate to higher unit sales.

Housing demand, from both local and foreign buyers, is anticipated to remain buoyant, going forward.

“Cash flows from operations will be an uptrend, on the back of robust operating income. From 2019 to 2021, a significant portion of cash outlays will continue to be allocated for investment properties, as the company grows its property portfolio,” said PhilRatings.

From 2022 and 2023, the bulk of cash outlays will be for financing activities as the company settles maturing loans. Cash for payment of debt will come from operations, as well as from re-financing.

Diversified engineering conglomerate DMCI Holdings, Inc. ended 2018 with P14.5 billion in consolidated net earnings, a 2-percent slip from P14.8 billion the previous year.

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