Cebu Holdings gets highest credit rating for planned bond sale

MANILA, Philippines - A Cebu-based affiliate of property giant Ayala Land Inc. (ALI) has secured the highest credit score for its planned P5-billion bond sale.

Cebu Holdings Inc.’s debut in the bond market was boosted by a PRS Aaa rating from Philippine Rating Services Corp. (PhilRatings).

“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,” PhilRatings said.

Cebu Holdings is selling P3 billion worth of debt papers due 2021, with an oversubscription option of up to P2 billion.

The local credit rater said it took note of the listed property firm’s “consistently improving profitability leading to expected improvements in cash flows, strong competitive position in the Cebu market, and competent and experienced management team.”

“The prospects for the Philippine economy as a whole and for Cebu, in particular, were likewise seen as a positive credit rating factor,” Philratings said.

Cebu Holdings was created in 1988 to transform the urban landscape of Cebu and help realize its economic potential. Its Cebu Business Park is the largest operating economic IT park in the country.

“Even with keener competition expected in Cebu, with the entry of bigger property developers into the area, Cebu Holdings benefits from its first mover advantage in the market and its track record in terms of the quality of development of its existing projects,” Philratings said.

Cebu is one of the fastest expanding economies in the southern area of the Philippines with a gross regional domestic product growth of 7.3 percent last year driven by the business process outsourcing sector.

Revenues of Cebu Holdings grew at annual rates of 13- to 33-percent from 2009 to 2013.

Cebu Holdings is also a beneficiary of strong ties with shareholder ALI in the areas of property development,  management, sales, and various operational aspects, the credit rater said.

Philratings said its issuer score is based on available information and projections at the time that the rating review is ongoing.

“Philratings shall continuously monitor developments relating to Cebu Holdings and may change the rating at any time, should circumstances warrant a change,” it added.