Filinvest Land, Inc. (FLI) will be issuing an additional P1.0 billion in long-term commercial papers (LTCPs) this year. In 1999, it issued P2.0 billion in LTCPs and these will mature by November 2004. PhilRatings has given a rating of PRS Aa to the new P1.0 billion issue and has also maintained the same rating for FLI’s outstanding P2.0 billion LTCPs.
PRS Aa-rated issues connote that the issuer has a strong capability for timely repayment of principal and interest on its obligations. A rating of PRS Aa is defined as: “margins of protection may not be as large as in PRS Aaa issues. Fluctuations of protective elements may be of greater amplitude or there may be elements which make the long-term risks appear somewhat larger than for PRS Aaa-rated securities.†PRS Aaa-rated securities, on the other hand, are those with the “smallest degree of investment risk.â€
The rating on FLI’s debt issue is based on the company’s above-average business profile stemming from its position as a large and established homebuilder with a prudent operating strategy. FLI’s earnings level remains acceptable and relatively stable while cash flow measures are seen as moderate. These factors, however, are still balanced against a still difficult market environment which can continue to constrain demand in the property sector.