PhilRatings Rates Small Business Corp. PRS Aa Minus (corp.)

PhilRatings announced that it has assigned an issuer rating of PRS Aa minus (corp.) to Small Business Corporation (SB Corp.) A company rated “PRS Aa” differs from the highest rated corporates only to a small degree, and has a STRONG capacity to meet its financial commitments relative to that of other Philippine corporates.  A plus or minus sign is added to qualify the relative position of an issuer for a particular rating category. SB Corp.’s issuer rating will be valid for one year, but can be changed at any time should circumstances warrant any change. 
SB Corp.’s rating is primarily grounded on its very supportive regulatory environment, which is seen to provide support to its credit profile going forward.  The New Magna Carta for Micro, Small and Medium Enterprises (MSMEs) effectively highlights the corporation’s role in the Philippine government’s advocacy of promoting MSMEs. 
The New Magna Carta enhances SB Corp.’s business profile, vesting the corporation with additional powers that will help SB Corp. fulfill its social agenda.  Additionally, the New Magna Carta provides financial support by providing new fund sources for the corporation  Provisions giving a five-year grace period on dividends to be paid to the National Government, and limiting dividends to not more than 30% of net income thereafter provide ample room for capital build-up.

The business and financial opportunities to be made available by the Magna Carta, however, will have to be supported by more specific plans and strategies for SB Corp. to maximize these opportunities.  Ongoing asset quality improvement efforts by SB Corp. are similarly positively viewed by PhilRatings.  Nevertheless, sustained results from these efforts are expected to take some time based on interim results for 2008 and considering the challenges posed by the current global credit crisis.