Diversified conglomerate San Miguel Corporation’s (SMC) planned P20-billion bond issuance has been assigned the highest PRS Aaa, with a Stable Outlook, Issue Credit Rating by the Philippine Rating Services Corporation (PhilRatings).

PhilRatings said in a statement that it also maintained its Issue Credit Rating of PRS Aaa, with a Stable Outlook, for the company’s outstanding rated bonds of P142.9 billion.

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 means the rating is likely to remain unchanged in the next 12 months.

SMC disclosed to the Philippine Stock Exchange (PSE) that it has filed today with the Securities and Exchange Commission (SEC) an Amended Registration Statement and Preliminary Offer Supplement relating to its Fixed Rate Bonds in the aggregate issue size of up to P20 billion.

This consists of a Base Offer of P15 billion and an Oversubscription Option of up to P5 billion, to be taken from the remainder of the company’s P50 billion peso-denominated shelf registered bonds

PhilRatings said the assigned issue ratings took into account SMC’s diversified portfolio that includes market-leading businesses; solid leadership; healthy profitability, driven by the continuous recovery of major businesses; and adequate liquidity, supported by stable cash flow generation.

In 2023, SMC’s consolidated net income significantly recovered by 67 percent, amounting to P44.7 billion. The recovery was mainly backed by significant volume growth in its key business segments.

“The continuing strong performance of SMC’s business segments is seen to bolster the expansion in consolidated sales moving forward. Net income will likewise be on an uptrend, although an expected uptick in costs would temper such growth,” said PhilRatings.

While price inflation, a weak peso, and high interest rates are anticipated to persist in the medium term, SMC’s margins are expected to be stable as the company actively implements initiatives to control and reduce costs, and which are seen to benefit SMC more in the long run.

PhilRatings said SMC continues to have ample flexibility to comfortably service its obligations. Projected cash from operations is expected to be positive and on an upward trend, backed by a steady increase in earnings. 

Investing activities, mostly for plant, property, and equipment, as well as intangible assets, will be primarily funded by internally-generated cash. Debt maturities will be paid from a mix of internally-generated cash and refinancing.