SMIC's P10-billion bond issue gets top rating

MANILA, Philippines - SM Investments Corp. (SMIC) has retained its PRS Aaa rating – the highest rating assigned by the Philippine Ratings Services Corp. – for its outstanding P10 billion bonds.

Obligations rated PRS Aaa are of the highest quality with minimal credit risk, as the issuer’s capacity to meet its financial commitment on the obligation is extremely strong.

In assigning the rating, PhilRatings took into account SMIC’s sound investment portfolio, consisting of core businesses with solid market position; sustained earnings and recurring cash flows; well-established brand equity, enhanced by synergies within the SM Group; strong liquidity; and sound capitalization.

The rating also considers the continued relatively positive prospects for the Philippine economy in general and the industries where the SM Group has primary investments, in particular.

From the first ShoeMart store in 1958, the SM Group has since evolved into a group of companies with five core businesses, namely: shopping malls, retail merchandising, financial services, real estate development and tourism, hotels and conventions.

 “The underlying reason for the steady and continuous growth of the SM group, particularly in the last decade, can be attributed to the fact the group has remained focused on its competitive strengths and continues to build on these. Also, while core businesses operate independently, synergies are explored and created to boost the various businesses’ growth potential,” PhilRatings said.

SMIC officials earlier said the company was on track to meet its 12 percent income growth target this year from P18.4 billion in 2010. Revenues are seen to rise to at least P200 billion from P179 billion the previous year.

SMIC is engaged in the shopping center business through SM Prime Holdings Inc., property development (SM Development Corp.), and financial services (Banco De Oro Unibank and China Banking Corp.)

It also has a 17.9-percent stake in Atlas Consolidated Mining & Development Corp.

Reflecting its bullish outlook on the country’s economy, SMIC has set a P47 billion capital expenditure program this year, higher than the P40.6 billion spent in 2010.