PhilRatings gives ‘Aa’ credit rating for DoubleDragon’s bond offering

Thursday, September 22, 2016.

DOUBLEDRAGON Properties Corp. secured a double “A” rating from Philippine Rating Services Corp. (PhilRatings) for a maiden bond offering of P15 billion.

In a statement issued on Wednesday, the local debt watcher said it assigned a PRS Aa issue credit rating for the proposed retail bonds, which DoubleDragon intends to issue under a three-year shelf registration.

The property company, owned by Mang Inasal founder Edgar J. Sia II and Jollibee Food Corp. Chairman Tony Tan Caktiong, initially plans to offer P5 billion of retail bonds with an oversubscription option of an additional P5 billion before the end of 2016.

PRS Aa, the second highest score on the local debt watcher’s scale, reflects the “extremely strong capacity” of an issuer to meet financial commitments. Obligations rated PRS Aa are of high quality and are subject to very low credit risk.

“The rating reflects the following factors: DoubleDragon’s clear and well-planned growth strategies; its strong alliance with its partners, as well as the expected buildup of the company’s recurring revenue base,” PhilRatings said.

Double Dragon, which listed on the local bourse in April 2014, is a relatively new player in the property industry but PhilRating noted its strong pipeline of projects would ensure a steady stream of revenues in the next few years.

“Once completed, the 100 City Malls, DD Meridian Park and Jollibee Tower will provide DoubleDragon with over one (1) million square meters of leasable space that will result in a stable recurring income stream for the Group. DoubleDragon intends to derive ninety percent (90%) of its income from recurring revenue sources,” the local debt watcher said.

DoubleDragon revenues in the last three years have steadily grown – P661.9 million in 2013; P1.7 billion in 2014; and P1.9 billion in 2015. For the first six months of 2016, DoubleDragon revenues went up 15.3% to P705.8 million.

“Furthermore, with synergies to be harnessed from Mr. Sia, Mr. Tan Caktiong and their companies and the SMIC group, DoubleDragon is in a very good position to carry out its future plans,” PhilRatings said, referring to SM Investments Corp. which invested in DoubleDragon’s unit CityMall Commercial Centers, Inc.

PhilRatings assigned a “positive” rating outlook for DoubleDragon’s credit rating for the planned debt issue. A positive outlook means there is “a potential for the present credit ratings to be upgraded in the next 12 months.”