Aboitiz’s Sibulan hydro plant project gets high credit rating

By  Manuel Cayon  -November 9, 2018

https://businessmirror.com.ph/aboitizs-sibulan-hydro-plant-project-gets-high-credit-rating/

  

DAVAO CITY—The corporate notes issued by Aboitiz’s Power Corp.’s subsidiary in Davao del Sur obtained a high PRS “AA+” and “stable outlook” rating, indicating a “very low credit risk” to its financial obligation.

The credit rating was accorded by the Philippine Rating Services (PRS) Corp. to the outstanding P4-billion corporate notes of Hedcor Sibulan Inc. (HSI).

A “PRS AA” rating means that the notes “are of high quality and are subject to very low credit risk [and] the obligor’s capacity to meet its financial commitment on the obligation is very strong,” AboitizPower said in a statement. A plus or minus further qualifies its ratings.

AboitizPower said HSI was relatively debt free in 2015. The following year it issued corporate notes totaling P4.1 billion “to redeem its [HSI’s Sibulan plant] preferred shares, which effectively lowered the company’s equity level.”

The company added HSI’s “capital structure remains adequate and is seen to improve going forward.”

HSI has a 12-year power supply contract with Davao Light and Power Co. (DLPC), also an Aboitiz subsidiary, which will expire in 2022. Through its own transmission lines, HSI is directly connected to DLPC enabling both companies to save on transmission costs. HSI’s power supply account for an average of about 12 percent of DLPC’s power requirements last year.

In 2017 HSI’s revenue from sale of power stood at P1.59 billion “coming from higher generation resulting from higher rainfall compared to the previous year, as well as an upward adjustment in the selling rate.”

AboitizPower said HSI was able to contain the cost of plant operations, which increased at a slower pace to P446 million.

Likewise, cash flows from operations in 2017 amounted to P1.28 billion, more than enough to cover maturing debt.

“Current [debt to equity] ratio remained sound at 3.3,” AboitizPower said adding that in February, the first tranche of the company’s outstanding corporate notes worth around P97.6 million was due and was settled accordingly.

The holding company for the Aboitiz Group’s investments in power said the Philratings’s stable outlook rating “is an indication as to the possible direction of any rating change within a one-year period and serves as a further refinement to the assigned credit rating for the guidance of investors, regulators and the general public.”