Petron’s P20-B bond issuance gets top credit rating

PETRON CORP. has secured the highest credit rating for its proposed P20-billion fixed rate bond issuance this year, a local debt watcher said.

In a statement over the weekend, Philippine Rating Services Corp. (Philratings) said it has assigned a PRS Aaa credit rating to Petron’s proposed issuance. This is the top rating on Philratings’ credit scale, indicating that the offer has the highest quality with minimal credit risk, while the issuer has an “extremely strong” capacity to meet its financial obligations.

The rating was also given a stable outlook, which means that it is unlikely to change in the next 12 months.

Philratings said it took into account Petron’s growing sales volume and continued expansion, leading market position, sound business strategy, as well as the healthy economic outlook and demand for fuel in coming up with the rating.

Petron’s consolidated sales volume grew by three percent to 54.4-million barrels in the first half of 2018, driven by the singledigit growth in sales volume from both Philippine and Malaysian markets.

Citing date from the Department of Energy, Philratings said Petron is the market leader in the local oil industry, cornering a market share of 27.6%, followed by Pilipinas Shell with 20% and Chevron with seven percent. The company ended the first half with a total of 2,404 service stations, 4.3% higher than what it had in the same period a year ago.

Meanwhile, Petron said it believes to be the third top player in the Malaysian oil market, next to Petronas and Shell Malaysia. The firm increased its operations there by adding more service stations, closing the first semester with 624, 5.2% higher year-onyear.

Petron said it will continue expanding its retail service stations to support the growth in volume production. It is also focusing on selling highvalue petroleum products to the most profitable segments in the domestic market to achieve better margins.

The proposed bond offering represents the final tranche of Petron’s three-year shelf registration with the Securities and Exchange Commission of up to P40 billion. The company has already issued the initial P20 billion in 2016, which also carries a PRS Aaa rating.

Petron said it will use the funds raised from the issuance for debt refinancing. It has engaged BDO Capital & Investment Corp. and BPI Capital Corp. as joint issue managers and, together with China Bank Capital Corp., as joint bookrunners and joint lead underwriters.

The company looks to list the bonds on the Philippine Dealing & Exchange Corp.

Petron grew its net income by 16% to P9.5 billion in the first six months of 2018, driven by a 32% increase in consolidated revenues to P273.5 billion. —