SMC to issue up to ₱60 B worth of CPs to fund capex

Published February 5, 2020, 12:00 AM

by manilabulletin_admin


Diversified conglomerate San Miguel Corporation (SMC) is planning to raise up to ₱60 billion from the issuance of commercial papers in one or more tranches as it slates massive capital expenditures for this year.

San Miguel said it will initially issue ₱20 billion, some ₱15 billion of which will be the principal amount and ₱5 billion will be an oversubscription option.

“The short-term commercial papers shall be listed with the Philippine Dealing and Exchange Corp.,” the company said.

“Cash for investment activities will be largest in 2020, reflecting the capital expenditures (capex) for major projects of Petron, SMFB (San Miguel Food and Beverages, Inc.) and the infrastructure business,” said Philippine Rating Services Corporation.

PhilRatings has assigned its highest issuer rating of PRS Aaa (corp.) to SMC in relation to its planned P60 billion Shelf-Registration Commercial Paper (CP) issue. The rating has a Stable Outlook.

An Issuer Credit Rating is an opinion on the general and overall creditworthiness of the issuer, evaluating its ability to meet all its financial obligations, within a time horizon of one year.

The focus is on financial strength and ability to meet existing and prospective obligations, under normal and stressed conditions.

A company rated PRS Aaa (corp.) has a very strong capacity to meet its financial commitments relative to other Philippine corporates.

In addition, PhilRatings said it is maintaining its PRS Aaa rating and a Stable Outlook for SMC’s outstanding ₱70.0-billion Fixed-Rate Bonds and Notes.

The assigned ratings reflect SMC’s well-entrenched market leadership and solid track record of subsidiaries, backed by stable demand that is expected to receive further boost from a growing domestic economy.

It also factors in SMC’s ample liquidity, supported by stable cash flow generation; manageable leverage position, as the progressive completion of capital-intensive projects reduces the need for debt financing, going forward; and its experienced management team, providing a large degree of assurance that the SMC Group’s aggressive growth strategy will be soundly executed.