FDC’s P10-B bonds get triple-A rating

The Gotianun Group’s investment arm Filinvest Development Corporation’s (FDC) planned P10-billion bond offering has been assigned the highest Issue Credit Rating of PRS Aaa, with a “stable outlook” by Philippine Rating Services Corporation (PhilRatings).

FDC is planning a bond issuance of P7 billion with an oversubscription option of up to P3 billion.

PhilRatings said it also maintained the PRS Aaa Issue Credit Rating for the outstanding bonds of FDC, with a total amount of P8.8 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.

PhilRatings said the assigned Issue Credit Ratings for FDC’s bonds take into account the firm’s conservative and professional management and that its main contributing subsidiaries, in terms of revenue, have a proven track record and have established brand names.

Also taken into consideration is FDC’s stable revenue stream from its diversified business portfolio; and the subdued economic growth.

FDC is engaged in real estate development, banking and financial services, hospitality operations, leasing operations, power generation, and sugar farming and milling.

In the first nine months of 2023, FDC reported that its consolidated net income continued to grow by 1.5 times from P5.4 billion in the first nine months of 2022 to P8.2 billion, driven by the improved performance of all business units.

Robust growth in the top line was observed, as total revenues and other income grew by 26 percent year-on-year to P64.6 billion in the first nine months of 2023.

The company’s real estate and banking operations were the highest contributors in terms of revenues, which accounted for 30.9 percent and 39.6 percent of total, respectively, in 2022.

The credit rating also considers the economic performance of the country which is set to moderate in 2023 due to a challenging external environment.

The Philippine economy grew by 5.9 percent in the third quarter of 2023, faster than the 4.3 percent growth recorded in the previous quarter. This brought the year-to-date average growth to 5.5 percent, which is still below the government’s 2023 GDP target of six percent to seven percent.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said that the economy would have to expand by 7.2 percent in the final quarter to meet the full-year target.

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The article was originally published in Manila Bulletin and written by James A. Loyola.