Megaworld retains top credit rating for P12 billion outstanding bonds

MANILA, Philippines — Philippine Rating Services Corp. has maintained its PRS Aaa rating for Megaworld Corp.’s outstanding bond issue of P12 billion.  

Megaworld is the listed property developer of tycoon Andrew Tan.

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

The rating was also assigned a stable outlook. This means that the rating is likely to remain unchanged in the next 12 months.

Priced at 5.3535 percent, Megaworld’s fixed rate bonds will mature in 2024.

PhilRatings said Megaworld would likely meet its target recurring income of P20 billion by 2020, given the high occupancy levels of its office and commercial buildings.

The company expects its rental portfolio to continue to grow and reach two million square meters by the end of 2020.

Growth in recurring income streams from Megaworld’s expanding leasing portfolio will support the company’s robust liquidity position, PhilRatings said.

Of Megaworld’s P12 billion bonds –  issued two years ago – the company made an initial offer of P8 billion upon announcing the debt raising activity, but due to strong demand from investors, the company fully exercised the P4 billion oversubscription option.

Demand came from individuals in the retail market, banks, investment funds, pension funds, insurance companies and other corporates.

In assigning the credit rating, PhilRatings took into account Megaworld’s robust liquidity, sound capitalization, well-experienced management and favorable industry outlook. 

Liquidity was more than satisfactory in the first quarter based on a current ratio of 3.7 times. Cash and cash equivalents amounted to P16.3 billion.

PhilRatings said strong internal cash generation and declining total debt would keep liquidity healthy. 

Megaworld’s debt levels remained well-managed, despite a hike in borrowings in 2018.

“The issuance of perpetual securities, as well as the company’s continued profitability, improved the company’s capitalization structure… Outstanding debt is projected to post a marginal decline, while continued profitability will support earnings retention,” PhilRatings said.