The credit rating for MRT III Funding Corporation Limited’s Asset-Backed Notes has been revised upwards, from PRS Ca to PRS Baa minus (as of August 6, 2008). A rating of PRS Baa is defined as, “Neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may characteristically unreliable over any great length of time. Such issues lack outstanding investment characteristics and in fact have speculative characteristics as well.”
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Ayala Land, Inc.’s (ALI) P4.0 Billion Bonds due in 2013 were given an issue rating of PRS Aaa by Philippine Rating Services Corporation (PhilRatings). The company’s outstanding P2.0 Billion Bond issue maturing this November 2008 likewise maintained its PRS Aaa rating.
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“Petron Corp. (Petron) will be borrowing P5.5 billion long-term. The borrowing is rated PRS Aaa,†PhilRatings announced.
A rating of PRS Aaa is given to debt obligations with the “smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secured. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.†A PRS Aaa is the highest rating that can be assigned on the PhilRatings rating scale.
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“1st Valley Bank (1st Valley), a rural bank operating in the Northwestern Mindanao region, is rated PRS A plus (rb),†PhilRatings announced. A rating of PRS A (rb) is defined as: “A rural bank rated PRS A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higher-rated rural banks.
Still, the rural bank has an ABOVE AVERAGE capacity to meet its financial commitments relative to that of other rural banks.†A plus or a minus sign, added to a rating, indicates the relative position of a rural bank in a particular rating category. The 1st Valley Bank rating is the first credit rating completed by PhilRatings under the PDIC Pilot Credit Rating Project (Pilot Project). The Pilot Project seeks to promote credit rating in the banking industry, specifically among small banks, in line with the PDIC’s thrust to promote market discipline and depositor protection.
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“City & Land Developers, Incorporated (CLDI) will be issuing P400 million in short-term commercial papers (STCPs). The STCP issue is rated PRS 2.â€
A rating of PRS 2 is defined as: “Above average (strong) capability for payment of commercial paper issue on both interest and principal. This is normally evidenced by many characteristics of a PRS 1 credit rating but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variations. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.â€
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“The rating for Petron Corporation’s (Petron) over-all creditworthiness is PRS Aaa (corp.),” PhilRatings announced. A rating of PRS Aaa (corp.) is defined as: “A company rated PRS Aaa has a VERY STRONG capacity to meet its financial commitments relative to that of other Philippine corporates.” A PRS Aaa is the highest rating that can be assigned on the PhilRatings rating scale.
In assigning the rating, the following key strengths are reflected: solid market leadership in the domestic fuels market despite heightened competition; sustained earnings and cash flow generation, providing strong coverage of interest and debt service; implementation of a diversification strategy which will provide growth opportunities; reliable crude supply from Saudi Aramco; and management’s adequate handling of Petron’s moderate debt profile.
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“The issue rating for Philippine Savings Bank’s (PSBank) proposed P2.0 billion Tier-2 issue is PRS Aa plus,” PhilRatings announced. A rating of PRS Aa means that the bank has a strong capability to pay its debt issue.
The Unsecured Subordinated Debt (USD) or Tier-2 issue will have a maximum term of ten years, with a call provision after 5 years.
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“The issuer rating for iBank is PRS Aa minus,” PhilRatings announced. A rating of PRS Aa means that the bank has a “…strong capacity to meet its financial commitments relative to that of other Philippine obligors and differs from the highest rated corporates only to a small degree.”
iBank has committed to obtain an issuer credit rating from PhilRatings in the next four years. An issuer credit rating can be qualified by a plus or a minus sign to indicate the relative position of an issuer in a particular rating category.
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“The issue rating for Asiatrust Development Bank’s (Asiatrust) proposed P550 million Tier-2 issue is PRS A minus,” PhilRatings announced. A rating of PRS A means that the issue has “…favorable investment attributes and are considered as upper-medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future.”
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“The rating for PCI Leasing and Finance, Inc.’s (PCI Leasing) proposed P1.0 billion in short-term commercial papers (STCPs) is PRS 1,” PhilRatings announced. A rating of PRS 1 is defined as: “Strongest capability for timely payment of debt instrument issue on both interest and principal.”
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“The corporate credit rating for the Pag-IBIG Fund (Home Development Mutual Fund) is PRS Aaa minus (corp.),” PhilRatings announced. A corporate credit rating of PRS Aaa means that the Pag-IBIG Fund has a “VERY STRONG capacity to meet its financial commitments relative to that of other Philippine corporates.”
PRS Aaa is the highest possible rating on PhilRatings’ corporate credit rating scale. A PRS Aaa rating, however, can be qualified further by a minus to indicate an obligor’s relative position for that particular rating grade. It is worth noting that the Pag-IBIG Fund is not required to obtain a credit rating for any specific purpose at the moment. It is to the institution’s credit that it has undergone the rating process for greater transparency, disclosure, and to promote good governance.
In assigning the rating, PhilRatings focused on the Pag-IBIG Fund’s performance as a consistently profitable company, with a fairly well managed investment portfolio and with very much assured liquidity to meet all of its obligations to members and creditors alike. The rating also takes into account the guarantee afforded by the Philippine government over members’ contributions; its strategic role in the execution of government policy to promote savings and to provide shelter; and the favorable regulations under which the Fund has been constituted, not the least of which is the mandatory nature of contributions from eligible members. PhilRatings, however, recognizes that steps will continuously have to be taken by the Fund to improve its asset quality in relation to its lending portfolio to boost the Fund’s profitability further. PhilRatings likewise views favorably steps being taken to put in place a fully integrated data and internal business process system to allow the Pag-IBIG Fund to deliver services to its members more efficiently and effectively, as well as measures taken to amend the Fund’s charter. How such changes progress and are implemented will be followed closely by PhilRatings.
The Pag-IBIG Fund has a solid base of 5.7 million members (as of 2004). Members’ contributions to assets ratio was at 77.6% as of May 31, 2005. The Fund’s earnings rose by 23% to P6.5 billion in 2004. Return on average assets was at 4.2% for the same period. As of May 31, 2005, investments of the Fund stood at P48.7 billion, primarily consisting of Treasury Notes/Bonds and Time and Special Savings Deposits. Projected claims in 2005 total P8.85 billion versus projected collections of P37.54 billion.
“The rating for Bank of Commerce’s (Bancommerce) over-all credit standing is PRS A,” PhilRatings announced. A rating of PRS A means that the bank has an: “…above average capacity to meet its financial commitments relative to that of other corporates and/or banks.” Bancommerce is the first Philippine bank to seek a domestic issuer or bank credit rating from PhilRatings. In October 2004, Bancommerce was likewise the first to apply for a domestic credit rating for a proposed P1.2 billion Tier-2 issue. The issue also has a rating of PRS A.
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“The rating for First Gen Corporation’s (First Gen) proposed P3 billion bonds is PRS Aaa,” PhilRatings announced. The PRS Aaa means that the: “…issue has the smallest degree of investment risk as interest payments are protected by a large or by an exceptionally stable margin, and principal is secured. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.” PRS Aaa is the highest possible credit rating on PhilRatings’ national or domestic rating scale.
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Planters Development Bank’s (Plantersbank) P1 billion in unsecured subordinated notes gets a PRS A rating, according to PhilRatings, the country’s pioneer domestic credit rating agency. The PRS A rating means that: “…an issue has favorable investment attributes and is considered as an upper-medium grade obligation. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future.”
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“The rating for Bank of Commerce’s proposed P1.2 billion in unsecured subordinated notes is PRS A,” PhilRatings announced. A rating of PRS A means that: “…the issue has favorable investment attributes and is considered as an upper-medium grade obligation. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future.” The Tier-2 issue has a term of ten years, with a call option after year 5. Bank of Commerce is the first bank to seek a domestic credit rating for its proposed issue.
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“The rating for PCI Leasing and Finance, Inc.’s (PCI Leasing) proposed P500 million in short-term commercial papers (STCPs) is PRS 1,” PhilRatings announced. A rating of PRS 1 is defined as: “Strongest capability for timely payment of debt instrument issue on both interest and principal.” The amount being applied for represents a significant increase from the company’s previous P100 million STCP line in 2003-2004 and which was also assigned a rating of PRS 1.
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“The rating for Ayala Corporation’s proposed P5 billion in 5-year bonds is PRS Aaa,” PhilRatings announced. A rating of PRS Aaa is defined as “having the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secured. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.”
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“Ayala Land, Inc.’s (ALI) proposed short-term commercial paper issue (STCP) amounting to P2.0 billion is rated PRS 1,†PhilRatings announced as it also maintained the PRS Aaa ratings for ALI’s outstanding P3.0 billion bonds, maturing in 2007 and its P2.0 billion bonds, maturing in 2008. At present, ALI has an existing P1.0 billion STCP issue and this will be replaced by the P2.0 billion STCP being applied for. Both PRS Aaa and PRS 1 are the highest ratings possible in PhilRatings’ long-term and short-term rating scales. PRS Aaa is defined as: “with the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secured. While the various protective elements are likely to change, such changes as can be visualized are unlikely to impair the fundamentally strong position of such issues.†PRS 1 likewise means that ALI has the strongest capability for timely payment of both principal and interest on its STCPs.
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“Globe Telecom, Inc. (Globe) is increasing the amount of its bonds from P2.7 billion to P3.0 billion. Even with the increase in amount, the bonds are still rated PRS Aaa,†PhilRatings announced. A rating of PRS Aaa is defined as: “…the issue has the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secured. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.â€
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“MRT III Funding Corporation’s (MRT III) ABS have been rated PRS Aa,†PhilRatings announced as it completed its first credit rating of ABS. Tranche details of the ABS are as follows:
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“Ayala Land, Inc.’s (ALI) proposed bond issue amounting to P2.0 billion is rated PRS Aaa,†PhilRatings announced as it also maintained the PRS Aaa rating for ALI’s outstanding P3.0 billion bonds, maturing in 2007 and the PRS 1 on ALI’s P1 billion in short-term commercial papers (STCPs). Both PRS Aaa and PRS 1 are the highest ratings possible in PhilRatings’ long-term and short-term rating scales. PRS Aaa is defined as: “with the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secured. While the various protective elements are likely to change, such changes as can be visualized are unlikely to impair the fundamentally strong position of such issues.†PRS 1 likewise means that ALI has the strongest capability for timely payment of both principal and interest on its STCPs.
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Philippine Rating Services Corporation (PhilRatings) announced that PCI Leasing and Finance Inc.’s (PCI Leasing) P100 million in short-term commercial papers (STCPs) have been assigned a rating of PRS 1. A rating of PRS 1 is defined as: “Strongest capability for timely payment of debt instrument issue on both interest and principal.â€
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Philippine Rating Services Corporation (PhilRatings) announced that Globe Telecom, Inc.’s (Globe) P2.7 billion bonds have been assigned a rating of PRS Aaa. A rating of PRS Aaa is defined as: “…the issue has the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secured. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.†Globe is currently pursuing SEC registration of the bonds.
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PhilRatings announces its first issuer rating ever of a government-owned and controlled corporation (GOCC) — the Philippine Export-Import Credit Agency (PhilExim), a government financial institution attached to the Department of Finance.
PhilExim is given an issuer rating of PRS Aaa (corp.) that is defined as, “the company has a VERY STRONG capacity to meet its financial commitments relative to that of other Filipino corporations. A PRS Aaa rating is the highest issuer credit rating assigned on the PhilRatings scale.”
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“The rating for Fort Bonifacio Development Corporation’s P330 million short-term commercial papers (STCPs) is PRS 3,†PhilRatings announced. A PRS 3 (Good Grade) rating is defined as: “Satisfactory capability for payment of debt instrument issue on both principal and interest. The effect of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in debt protection measures…â€.
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