19% US tariff unlikely to hurt TOP PH firms
The new 19-percent US tariff on Filipino products is unlikely to diminish the appeal of the Philippines’ top companies and their dollar bonds, as most have domestically driven operations with limited reliance on US demand.
In a report released on Thursday, CreditSights—a unit of Fitch Group—maintained its recommendations on Philippine companies under its coverage. The firm cited analysis from its sister company, BMI, which expects only a “limited” economic impact from the tariff adjustment.
CreditSights covers major groups like Aboitiz Equity Ventures, International Container Terminal Services (ICTSI), JG Summit, Jollibee Foods, Manila Water and several firms under the Ayala Group.
Also, CreditSights rates dollar bonds issued by PLDT, San Miguel (SMC) and SMC Global Power.
Despite a modest reduction in tariffs on Filipino goods entering the US, CreditSights maintained its “market perform” rating on select dollar bonds issued by Globe Telecom, ICTSI, PLDT and SMC.
This is a neutral rating which reflects expectations that these bonds will perform in line with broader market or sector averages.
Meanwhile, CreditSights reiterated its “outperform” rating on the $400 million bonds of SMC Global Power. This signals expectations of above-market returns relative to comparable issuers.
Domestic-driven
CreditSights said bond issuers like AC Energy, Globe, Manila Water, Petron, PLDT and SMC Global are largely domestic-focused. It added that while Aboitiz and JG Summit have export-heavy food manufacturing businesses, their products are primarily sold across Asia.
Meanwhile, CreditSights noted that Ayala Corp.’s electronic manufacturing services unit has some export exposure to the US. Still, this contributes “a very small portion of its total revenues.”
In the case of SMC, which has a large food and beverage exporting business, CreditSights said the company’s shipments to the US are limited at less than one percent of total revenues. ICTSI also has small direct trade exposure to the US. But CreditSights said the firm could see some “throughput weakness at its Mexico port.”
Lastly, the Fitch unit said Jollibee’s US business could potentially face higher raw material import costs. However, most of its imports are sourced from within North America.
In a separate report, BMI said the Philippine economy would still be able to grow by more than 5 percent in 2025 despite the tariff storm.
“We will wait for further details about the deals before assessing their impact. For now, we maintain all our macroeconomic forecasts … although the tariff rate for the Philippines came in significantly above what we were expecting,” BMI said.
