SM Prime secures top rating for P20-B bonds

MANILA, Philippines - Integrated property developer SM Prime Corp.’s proposed bond issuance of up to P20 billion obtained the highest credit rating from local credit watcher Philippine Rating Services Corp.

The rating for SM Prime’s P20-billion outstanding bonds was likewise maintained at PRS Aaa.

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

In assigning the rating, PhilRatings took into account SM Prime’s strong financial profile, solid brand equity and operational track record, well diversified portfolio, and its ability to successfully tap the capital market for alternative sources of funds as needed.

The consolidation of the SM Group’s real estate properties made SM Prime one of the biggest integrated developers in the Philippines, with its strong position domestically further enhanced by its growing mall operations in China.

SM projects, particularly in terms of mall development, have a solid and established following as SM Malls are constantly expanding and keeping up with customer requirements.

SM Prime currently has 52 malls in the country, with a total gross floor area (GFA) of 6.6 million sqm.

In the Philippines, SM malls are strategically located in Metro Manila and throughout Luzon, Visayas and Mindanao.

For its China operations, SM Prime has five malls. These are located in the cities of Xiamen, Jinjiang, Chengdu, Suzhou and Chongqing, with a total GFA of 0.8 million sqm.

The company’s strong profitability continued in the first half with net earnings growing to P18.65 billion, slightly higher than the recorded net income for 2014 of P18.39 billion.

“Over the projected period, earnings will remain robust. Revenues will still be driven by the strong rental fees coming from its mall operations as SM Prime continues to expand and construct and open more malls. Rental fees will continue to account for the bulk of total revenues,” PhilRatings said.