SMC Tollways looking to raise up to P35 billion from bond issuance

MANILA, Philippines —  Diversified conglomerate San Miguel Corp. (SMC), through its tollways arm, intends to raise as much P35 billion from  a proposed bond offer.

SMC Tollways Corp.’s planned bond issue of P30 billion with an oversubscription option of up to P5 billion has been assigned an issue credit rating of PRS Aaa with a stable outlook by the Philippine Rating Services Corp. (PhilRatings).

Obligations rated PRS Aaa are of the highest quality with minimal credit risk.

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

PhilRatings said it took into account the positive demand for the services of SMC Tollways, the company’s sustained improvement in profitability as well as easing leverage levels in assigning the rating and corresponding outlook.

Further, it said that the leadership and management of SMC Tollways is largely in line with the San Miguel Group, under its infrastructure arm San Miguel Holdings Corp.

As part of the SMC Infrastructure Group, SMC Tollways holds the concession rights for the Skyway system consisting of the Skyway Stage 1, Skyway Stage 2, Skyway Stage 3 and the Skyway Extension.

SMC Infrastructure also oversees other major expressways in Luzon, such as the South Luzon Expressway, Southern Tagalog Arterial Road, Tarlac-Pangasinan-La Union Expressway and the NAIA Expressway.

PhilRatings said that annual average daily traffic (AADT) in the Skyway system has progressively increased since the outbreak of the pandemic in 2020.

“Demand for the expressway is seen to be resilient with a healthy projected growth in overall AADT moving forward,” PhilRatings said.

“Going forward, SMC Tollways anticipates steady profitability supporting solid cash generation and healthy liquidity. Leverage levels are seen to continue to improve over the long-term, backed by a shrinking loan balance and growing equity,” it said.

SMC is currently in talks with Metro Pacific Tollways Corp. (MPTC) on a planned mega-tollways merger which is expected to be finalized by the first quarter of next year.

The merged entity of MPTC and SMC’s toll unit is targeted to be listed on the Philippine Stock Exchange.