Having an important role in helping boost recovery during this pandemic, Small Business Corporation (SBCorp), the financing arm of the Department of Trade and Industry (DTI), was assigned a high Issuer Credit Rating of PRS A minus (corp.).
Philippine Rating Services Corporation (PhilRatings) added that the assigned rating has a Stable Outlook.
SBCorp is the government financial institution (GFI) tasked by Republic Act (RA) 9501 to implement various programs that would assist micro, small and medium enterprises (MSMEs) in all areas, including finance and information services, training and marketing.
A company rated PRS A (corp.) is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higher-rated corporates.
Still, the obligor has an above average capacity to meet its financial commitments relative to that of other Philippine corporates. A Stable Outlook means the rating is likely to be maintained in the next 12 months.
In assigning the rating, PhilRatings took into account SBCorp management’s solid experience in and deep understanding of the MSME sector as well as its weak profitability.
Also a major consideration is the expectation of strong government support, at least in the short-term, given the agency’s significant role in government efforts to assist pandemic-stricken MSMEs.
The quarantine measures put in place to curb the spread of COVID-19 has greatly impacted the MSME sector. According to the DTI, 52.66 percent of the country’s MSMEs stopped or closed their operations due to the pandemic while 12.55 percent had limited operations.
As the financing arm of the DTI, SBCorp is seen to play a significant role in the government’s aggressive efforts to help these pandemic-stricken MSMEs.
To assist its clients, SBCorp announced a moratorium on loan payments during the imposition of the Enhanced Community Quarantine (ECQ), starting 17 March 2020, and developed new products to aid enterprises affected by the COVID-19 pandemic.
“The strong relevance of SBCorp’s mandate in government plans for the recovery of the MSME sector creates expectations that government support provided to the agency will remain, at least during the term of the current administration,” PhilRatings said.(James A. Loyola)