July 9, 2018 | 12:06 am
SMC Global Power Holdings Corp.
intends to raise P15 billion from the issuance of fixed rate bonds to refinance
debt.
In a statement over the weekend,
Philippine Rating Services Corp. (PhilRatings) said it assigned SMC Global
Power a PRS Aaa rating for its proposed bond offering, which represents the
last tranche of its three-year shelf registration of up to P35 billion.
PRS Aaa is the highest credit rating
under the local debt watcher’s long-term issue credit rating scale. This
indicates that SMC Global Power has an “extremely strong” capacity to meet its
financial obligations.
The proposed bonds were also given a
stable outlook, which means that the rating is unlikely to change in the next
12 months.
The power generation arm of
diversified conglomerate San Miguel Corp. (SMC) has so far issued P20 billion
worth of bonds from its shelf registration program, with P15 billion issued in
July 2016 and P20 billion last December. Both outstanding issuances retained
their PRS Aaa rating.
In coming up with the ratings,
PhilRatings took into account SMC Global Power’s market position, support from
SMC, stable earnings and cash flows, as well as its capacity to expand.
“SMC Global Power benefits from the
extensive network, keen understanding of the Philippine economy and management
expertise of SMC. Furthermore, SMC provides management and support services to
SMC Global Power, in areas such as human resources, corporate affairs, legal,
finance, treasury and other functions,” the debt watcher said.
SMC Global Power currently has a
combined capacity of 4,153 megawatts (MW), sourced from a diversified mix of
fuel supply including natural gas, coal, and hydropower. Its existing portfolio
includes the 218-MW Angat Hydroelectric Power Plant, the 450-MW greenfield
power plant in Limay, Bataan, the 300-MW greenfield power plant in Malita,
Davao, and the 640-MW Masinloc power plant in Zambales.
It also acts as the Independent
Power Producer Administrator (IPPA) for the Sual, Ilijan, and San Roque power
plants.
The company’s combined capacity
comprises 19% of the power supply in the National Grid, 25% of the Luzon grid,
and 9% of the Mindanao grid.
“SMC Global Power is well-positioned
to take advantage of the robust electricity demand outlook, in line with the
country’s continuing economic growth. SMC Global Power’s existing capacity is
still below the power market share limitations set by the Energy Regulatory
Commission, giving the company enough room for portfolio expansion,” according
to PhilRatings.
The debt watcher also noted it will
be monitoring the legal dispute between SMC Global Power’s subsidiary, South
Premier Power Corp. and the Power Sector Assets and Liabilities Management
Corp. on the Ilijan IPPA agreement. The two parties have differing
interpretations on certain provisions on generation payments from the facility.
The case is now pending with the
Court of Appeals.
“Amidst the ongoing dispute, SPPC
continues to be the IPPA of the Ilijan power plant. PhilRatings shall continue
to monitor developments in relation to this case and its subsequent
resolution,” it said. — Arra B. Francia
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