STI Education Services Group (STI ESG), a subsidiary of listed STI Education Systems Holdings Inc. (STI Holdings), said its P3-billion bond issue received a high rating of “PRS Aa” from Philippine Rating Services Corp. (PhilRatings).
In a statement, STI said PhilRatings has commended the company’s bond issue as “high quality and subject to very low credit risk.”
STI ESG said on January 12 that it has filed a registration statement with the Securities and Exchange Commission for the shelf registration of P5 billion in fixed-rate bonds, with a first tranche amounting to P3 billion.
STI Holdings Chair Eusebio H. Tanco said the favorable rating for STI ESG’s bond offer will provide investors a reference on the financial health of the company.
“Even before STI ESG considered entering the local bond market, we made it a point to maintain steady growth in our financial performance. The rating we received validated this strong commitment,” Tanco said.
PhilRatings said the key factors for its “Aa” rating on STI’s bond issue include the company’s ample cash flows with minimal reliance on debt, stable demand for its business, its position as an established educational institution with the ability to adapt to shifts in the industry, and its consistently improving revenues.
“In terms of financial performance, STI ESG’s consolidated revenues were on a consistent upward trend historically. From P1.6 billion in 2012, total revenues went up to P2.4 billion in 2016. The bulk of revenues were accounted for by tuition and other school fees, comprising 80.7 percent to 87 percent of total,” PhilRatings said in a statement.
“Over the coming years, consolidated revenues will continue to expand on the back of a continued increase in the number of student enrollees. The Group is focused on organic growth in its schools located nationwide and will continue to pursue this track during the projected period,” the credit rating agency added.
The P3-billion bond offer is the initial tranche of STI ESG’s three-year bond program worth P5 billion under the shelf registration of the Securities and Exchange Commission (SEC).
STI ESG earlier said proceeds of the bond issue will be used to finance its campus expansion projects and for other general corporate requirements.
At present, STI ESG operates 32 company-owned and another 32 franchised STI colleges nationwide. It also has 12 education centers, five of which are company-owned and seven are franchised. The company also owns and operates iACADEMY in Makati specializing in animation, mutimedia and digital arts, as well as De Los Santos STI Colleges, a health science and nursing school.
Through joint venture firm Attenborough Holdings Corp., STI and the Benitez Group own and operate Philippine Women’s University and the campuses of Jose Abad Santos Memorial School (JASMS).
STI ESG is 98.66 percent held by listed parent firm STI Holdings, led by businessman Eusebio Tanco.