SMIC plans P15 B bond offer, secures SEC approval for P30 B debt

Published July 15, 2020, 10:00 PM

by James A. Loyola

SM Investments Corporation (SMIC), the holding company of the SM Group of Companies, is planning to raise up to P15 billion from a bond issuance after securing the approval of the Securities and Exchange Commission for a P30 billion debt securities program.

 In a disclosure to the Philippine Stock Exchange, SMIC said the P30 billion bonds were approved under a shelf registration of three years.

SMIC was assigned the highest issue credit rating of PRS Aaa for the initial tranche of P10.0 billion, with an oversubscription option of up to P5.0 billion, by the Philippine Rating Services Corporation (PhilRatings).

The rating for SMIC’s outstanding P42.7 Billion bonds was likewise maintained at PRS Aaa. PhilRatings assigned a Stable outlook for the ratings of the proposed and outstanding 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. PRS Aaa is the highest rating assigned by PhilRatings.

A stable outlook, on the other hand, indicates that the ratings are likely to be maintained or to remain unchanged in the next twelve months.

“The ratings reflect SMIC’s core businesses with strong market positions; its sound balance sheet, with healthy liquidity and conservative capital structure; and the strategies that the SM Group has put in place to immediately address pressure on earnings due to the ongoing community quarantine and COVID-19 pandemic,” PhilRatings said.

“Online and delivery initiatives of the SM Group are being expanded to address new customer needs and behavior brought about by the quarantine and pandemic. With the re-opening of malls being done in phases, expectations are for a slow return of foot traffic to pre-lockdown levels,” PhilRatings said.

  With consumers being apprehensive of going to public places, the SM Group is actively focusing on strategies that will provide its customers with alternative options to do their shopping and groceries, and which will help sales recover moving forward.

The Retail business has upgraded its platforms to enable online or call-store shopping, and has increased its delivery and pick-up options.

Initiatives of the Mall business include offering logistics solutions to tenants, increasing delivery options for customers, and the designation of click-and-collect fulfillment locations.

PhilRatings also said that many of initiatives of BDO, the country’s leading commercial bank, were supposed to be rolled out this year, but the rollouts were delayed by the quarantine.  But some of these initiatives will push through in the latter part of 2020.

These include QR (quick response) capability which is similar to AliPay; upgrade of the bank’s digital banking to reflect a more modern architecture, and the upgrading of the bank’s IT platform so that it will be able to integrate with outside applications.

“Expectations are for a positive market response to these initiatives. In the first quarter of 2020, WalterMart Delivery reported ten times growth in sales and transaction count, five times higher store basket transaction size, and 20 times growth in the number of application users. BDO, on the other hand, reported increased sign-ups for online and mobile accounts, given the growth in number of transactions,” noted PhilRatings.