The proposed P1.2 Billion IT Bonds to be issued by Stradcom Corporation have been rated PRS Aa by PhilRatings. PRS Aa is the second highest possible rating for long-term issues.
Stradcom Corporation (Stradcom) is a project company tasked to develop and operate information technology facilities for driver licensing and motor vehicle registration transactions of the Land Transportation Office (LTO). The bonds to be issued have a tenor of five years and 1 day and are adequately secured. Interest on the bonds is based on the 182-day Treasury Bill plus a spread and is repriceable every semester.
A PRS Aa rating means that Stradcom has a strong capacity to meet its financial commitments on the debt issue. It also means that the issue has a small degree of investment risk. The rating reflects Stradcom’s well-protected market with stable growth prospects as the company has a 10-year build-own-operate concession agreement with the LTO. The status of the project, to date, gives reasonable assurance of timely completion, within budget, thereby supporting expectations of stable and satisfactory cash flows. The computerization project is likewise technically feasible given the use of commercially proven technologies and reputable supply and service contractors.
The national roll-out is expected to be completed within the year. The system has already been installed in Metro Manila and has been accepted by the LTO, thereby significantly reducing completion risk.
Stradcom is 100%-owned by Stradcom International Holdings, Inc. (SIHI), a company in which the International Finance Corporation (IFC) and e-PLDT (a wholly owned subsidiary of PLDT) hold preferred convertible redeemable shares. Having these entities as strategic partners in the enterprise augur well for Stradcom. PLDT is the dominant telecommunications company in the Philippines while IFC is the investment arm of the World Bank. Prior to investing in the project, IFC commissioned Booz Allen & Hamilton to do a technical review of the project. Aside from being a shareholder, IFC has also committed to provide USD12 million in term funding to complete the funding package for the project.