Business Mirror
Published on Sunday, 16 December 2012 17:43 Written by Paul Anthony A. Isla / Reporter
LISTED Energy Development Corp. (EDC) said on Friday the Philippine Rating Services Corp. (PhilRatings) maintained the issue credit rating for its outstanding P12-billion bonds at PRS Aaa.
In a statement, EDC said the bonds were issued in two tranches, with P8.5 billion due in June 2015 and P3.5 billion due in December 2016.
PRS Aaa is the highest credit rating on PhilRatings’s long-term credit rating scale.
Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
PhilRatings said it took note of EDC’s reinforced sustainable revenue stream and strong cash-flow generation, enhanced standing as a vertically integrated geothermal-power producer in the country, its financial flexibility, improved debt profile, thereby mitigating various operational and financial risks, its proactive stance in addressing emerging trends in the power sector, and its improved profitability.
The ratings granted by PhilRatings are based on available information and projections at the time that the rating review is ongoing. The company will also continuously monitor developments relating to EDC and may change the rating at any time, should circumstances warrant a change.
EDC’s acquisition of the Bacon-Manito and Palinpinon-Tongonan geothermal facilities marked the full integration of its geothermal value chain.
By managing both steam production and electricity generation, EDC benefits in terms of synchronized decision-making processes and operational cost savings.
EDC continues to generate a healthy stream of revenues from its current operating facilities despite the delays encountered in the start of commercial operations for the Bacon-Manito facility and the scheduled phased rehabilitation of the Palinpinon-Tongonan facility.
The bulk of the energy production is contracted and tied to medium to long-term take-or-pay contracts which provide sustainable and predictable cash flows for the company.
EDC continues to maintain healthy cash levels given the robust cash generated from its operating activities. This, coupled with adequate credit lines, provide EDC with strong financial flexibility to meet sudden liquidity needs.
EDC said this was further enhanced by the loan refinancing activities of the company which effectively reduced financing costs and lengthened the average life of its loans. Debt profile has also been limited to only peso- and dollar-denominated loans, with the exposure to foreign exchange risk managed given the natural hedge provided by the company’s long-term contracts.
Adding to the company’s operational efficiency is its well-positioned strategy in addressing emerging trends in the power sector.
Geothermal projects in the pipeline are expected to deliver a substantial amount of capacity in the coming years, timely enough to meet the energy needs in the different island grids. Given the recent approval of the Feed-in-Tariff rates, pending wind projects are expected to push through and become operational in the medium term.
For the first nine months of 2012, EDC posted a consolidated net income of P8.6 billion, a significant turnaround from the P488-million net loss registered during the same period last year.
EDC attributed the recovery to a combined result of the company’s improved revenues and controlled expenses, although the main driver for the improvement was the absence of a P5-billion one-time impairment loss booked for the Northern Negros plant in 2011.
EDC added that the positive trend in profitability is expected to continue going forward, particularly when the Bacon-Manito plant commences full operations and the Palinpinon-Tongonan plant completes its rehabilitation. source
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