SMC Global Power plans to raise up to P30B from bond issue

SMC GLOBAL Power Holdings, Corp. plans to raise up to P30 billion from the issuance of bonds, which have been rated of the highest quality by a local debt watcher.

Philippine Rating Services Corp. (Philratings) said in a statement over the weekend that SMC Global Power’s proposed bond issuance of P25 billion, with an oversubscription option of up to P5 billion, has been assigned a PRS Aaa rating. This indicates that the bonds are of the highest quality with minimal credit risk.

“The obligor’s capacity to meet its financial commitment on the obligation is extremely strong,” according to Philratings.

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

The issuance marks the first tranche of SMC Global Power’s P60-billion shelf registration with the Securities and Exchange Commission. The company currently has P50 billion worth of outstanding bonds, which also carry a PRS Aaa rating.

Philratings took into account SMC Global Power’s leading market position and plans for expansion, the strong support of its parent San Miguel Corp., the stability of its financials, as well as its position to take advantage of the growing demand for electricity in the country.

SMC Global Power has a combined capacity of 4,197 megawatts (MW) as of September 2018, sourced from a mix of natural gas, coal, and hydropower resources. The company’s capacity accounts for 19% of the National Grid’s power supply, and 25% of the Luzon Grid.

The company’s portfolio includes the 218 MW Angat Hydroelectric power plant in Bulacan, the 450MW greenfield power plant in Limay, Bataan, the 300 MW greenfield power plant in Malita, Davao Occidental, and the 684 MW Masinloc Power Generating Facility in Masinloc, Zambales.

SMC Global Power is also the independent power producer administrator (IPPA) for the Sual, Ilijan and San Roque power plants.

Apart from this, the firm also targets to start the commercial operations of Unit 4 of the Limay Greenfield Power Plant with 150 MW, and Unit 3 of the Masinloc Power Plant with 335 MW by the second quarter of the year. These facilities will bring SMC Global Power’s total attributable capacity to 4,682 MW.

Philratings also cited the vast network of parent company SMC, which could provide the potential captive demand given its electricity requirements.

On the other hand, the debt watcher noted that SMC Global Power has an ongoing dispute against Power Sector Assets and Liabilities Management Corp. through its unit South Premiere Power Corp. (SPPC) in relation to the Ilijan IPPA Agreement

“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,” Philratings said. —