December 16, 2019 | 12:03 am
ENERGY Development Corp. (EDC) was
again given the top credit rating by local debt watcher Philippine Rating
Services Corp. (PhilRatings) for its P7-billion outstanding bonds.
In a statement over the weekend,
PhilRatings said the energy firm maintained its issue credit rating of “PRS
Aaa” for the bonds. It has also been assigned a stable outlook for the rating.
This means EDC is expected to have
an “extremely strong” capacity to meet its financial commitments, and that the
credit rating will hold until the next 12 months.
EDC’s P7-billion outstanding bonds
is composed of P3-billion retail bonds scheduled to mature in May 2020 and
P4-billion retail bonds due on May 3, 2023.
“The assigned issue credit rating
and outlook reflect the following key considerations: (i) leading position as a
renewable energy company, both domestically and globally; (ii) strong parent
company support and highly-experienced management team; (iii) adequate cash
flows to cover debt payments; (iv) conservative capital structure, with a
well-managed foreign currency exposure; and (v) a supportive economic and
regulatory environment,” PhilRatings said.
The debt watcher noted EDC’s
standing as the largest vertically integrated geothermal developer in the world
and as a leading renewable energy firm with footprint across geothermal, wind,
hydroelectric and solar energy.
It said the company has an installed
capacity of 1,473.3 megawatts (MW) and a combined geothermal capacity of
1,179.3 MW as of end-September, making it a leading player in the energy
sector.
“From 2017 to end-September 2019,
EDC consistently posted positive operating cash flows and net cash flow levels.
The company’s current ratio and debt service coverage ratio (DSCR) also
remained above 1.0x throughout the period,” PhilRatings said.
It added cash flows of the firm is
expected to keep growing until 2021 and its liquidity and debt servicing
capacity to be kept at bay.
“With the Philippine Gross Domestic
Product (GDP) expected to grow at around 6% in 2019, power demand is
anticipated to follow the same trajectory, thus pointing to a positive outlook
for the country’s power industry,” the debt watcher said.
EDC is a subsidiary of Lopez-led
First Gen Corp. and contributed $67 million (up 28.8% year-on-year) to its
earnings in the nine months to September. Attributable net income of First Gen
expanded 45.9% to $220.3 million during the nine-month period.
Shares in First Gen at the stock
exchange climbed 0.95 points or 3.88% to P25.45 apiece on Friday. EDC delisted
from the local bourse last year. — Denise A. Valdez
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