SM Prime Holdings, Inc. is planning to raise up to P10 billion from the third tranche of its P100 billion fixed-rate bonds with the Securities and Exchange Commission in February last year.

In a disclosure to the Philippine Stock Exchange, the firm said it has filed with the SEC an application for a permit to sell for the third tranche issuance of fixed-rate bonds in the amount of P5 billion with an over subscription option of up to P5 billion with maturity of 7 years.

SM Prime issued its first tranche of the bonds for a total of P15 billion in 5-year and 7-year fixed rate bonds in March 2020 and the second tranche for a total of P5 billion in 2.5-year and 5-year fixed rate bonds in February this year.

Philippine Rating Services Corporation (PhilRatings) has assigned its highest issue credit rating of PRS Aaa to SM Prime’s proposed bond issue of P5.0 billion, with an oversubscription option of up to P5.0 billion.

The rating has a Stable Outlook 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.

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

PhilRatings said the assigned issue ratings take into consideration SMPH’s healthy liquidity; sound capitalization; as we as its well-experienced shareholders and management.

The ratings agency also noted SM Prime’s “strong brand equity which is expected to survive the challenges brought about by the pandemic, and provide a solid take off point for growth once the domestic economy starts to recover.”

Despite ongoing quarantine restrictions on mall visits, SM Prime’s cash flow remained healthy as operations continued to be the main source of cash. Cash was largely used for investment properties, indicating continued expansion during the country’s economic recession.

From 2022 and onwards, the increase in operating cash will be supported by higher income. With the foregoing, funding for capital expenditures will be mostly sourced from internal funds,” said PhilRatings.

It also noted that, the SM Group has exhibited sustained growth and expansion in past years, riding out the country’s economic downturns and creating a strong franchise for the SM brand.

“This solid brand equity is supported by robust synergies within SMIC, and the Group’s highly-focused growth strategy. Its strong brand is seen as a solid anchor for SMIC amidst the prolonged pandemic, and is expected to provide a powerful push for growth once the domestic economy begins to recover,” PhilRatings said.