SMC plans ₱15-B bond issue for preferred share redemption

Published December 4, 2019, 12:00 AM

by manilabulletin_admin

By James A. Loyola

San Miguel Food and Beverage, Inc., a unit of conglomerate San Miguel Corporation, is planning to raise ₱15 billion from a planned bond issuance to pay for the redemption of its preferred shares.

SMFB is proposing to offer Fixed-rate Bonds worth ₱15.0 billion with the proceeds mainly to be used for the redemption of the ₱15.0 billion Series 2 Preferred Shares of the Company in March 2020.

Philippine Rating Services Corporation (PhilRatings) assigned its highest Issue Credit Rating of PRS Aaa, with a Stable Outlook, for SMFB’s fixed rate bonds.

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.

PhilRatings said it took into account major rating factors in assigning the rating and the outlook for SMFB’s proposed bonds including the strong brand equity and leading market position of the firm’s core businesses.

The rating also reflects SMFB’s realized synergies as part of the San Miguel Group and as a result of the consolidation of the food and beverage business under SMFB, coupled with the company’s highly-experienced management team.

It also took into account the continued positive outlook for the economy which is expected to benefit the food and beverage industry; the Company’s conservative financial position considering the capital intensive nature of its businesses; and its strong profitability performance and healthy cash flow generation.

PhilRatings said that, as an SMC-owned company, SMFB realizes synergies from its relationship with the broader San Miguel Group. The size and scale of the broader San Miguel Group likewise provide the Company with significant leverage and bargaining power with suppliers.