SMC Global Power’s P20-billion bonds get top credit rating from PhilRatings

SMC Global Power Holdings Corp. secured the highest rating for its proposed P20-billion fixed rate bonds, a local debt watcher said.

In a statement issued on Monday, the Philippine Rating Services Corp. (PhilRatings) said it assigned a PRS Aaa credit rating on the company’s P20-billion debt notes, with an oversubscription option of up to P5 billion.

This indicates SMC Global Power’s capacity to meet obligations for the issue is “extremely strong,” while a stable outlook means that the rating is not likely to change in the next 12 months.

PhilRatings attributed the assignment of the credit rating to SMC Global Power’s market position, plans for expansion, the strength of its parent company, as well as its long-term, off-take contracts with customers.

SMC Global Power has a combined capacity of 3,063 megawatts from its diversified portfolio of coal, natural gas, and hydro power assets. This comprises 14.7% of the power supply of the national grid, 19.8% of the Luzon grid, and 5% of the Mindanao grid.

“SMC Global Power is in a good position 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,” PhilRatings said in a statement.

The debt watcher also took into consideration the legal disputes involving SMC Global Power. This includes its dispute with the Power Sector Assets and Liabilities Management Corp. regarding the Ilijan power plant, which contributes to a third of the company’s consolidated revenues.

“PhilRatings shall continue to monitor developments in relation to this case and its subsequent resolution,” said the watchdog.

In an earlier disclosure, SMC Global Power said the funds raised from the issue will be used to refinance outstanding loans of the parent firm amounting to $400 million.

The company had earlier raised P15 billion in fixed-rate bonds due 2021, 2023, and 2026. PhilRatings has also maintained the PRS Aaa credit rating for this issue.

SMC Global Power recorded an operating income of P13.3 billion in the first half of 2017, on the back of revenues that stood at P40.7 billion. These figures are lower year on year as a result of the annual maintenance shutdown of the Ilijan and Malampaya plants between March and April.

Shares in SMC rose by a peso or 1% to close at P101 each at the Philippine Stock Exchange on Monday. —