EDC bonds still highest rated

Energy Development Corp. (EDC) retained the highest credit grade for its retail bonds from the Philippine Rating Services Corp. (PhilRatings).

The credit watcher reported that it maintained the issue credit rating of PRS Aaa for EDC’s outstanding retail bonds, namely, the P8.5-billion retail bonds due on June 4, 2015; the P3.5-billion issue due on Dec. 4, 2016; the P3-billion retail bonds due on May 3, 2020; and the P4-billion retail bonds due on May 3, 2023.

PRS Aaa is the highest credit rating on PhilRatings’ long-term issue 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 is extremely strong.

The rating reflects several key considerations, such as EDC’s core business, which continues to generate “significant revenues,” with profitability expected to improve further in the next two years.

PhilRatings cited EDC’s ample cash flows and financial flexibility to service debt obligations, particularly its P8.5-billion retail bonds falling due on  June 4, 2015.

The credit watcher also noted EDC’s market leadership, with the company having the expertise and scale to withstand competition, as well as its experienced management team and technical people.

Also considered was the Philippine’s energy demand situation, as well as EDC’s new plants and international expansion, which are expected to be drivers of future growth.

PhilRatings based its assessment on available information and projections at the time the review was made. PhilRatings will continuously monitor developments relating to EDC and, when necessary, may change the rating at any time.

EDC is the largest producer of geothermal energy in the Philippines, with a combined geothermal capacity of 1,129.4 megawatts (MW) as of Dec. 31, 2013.

EDC is likewise engaged in hydroelectric power generation. It acquired a 60-percent stake in First Gen Hydro Corp., which operated the 132-MW Pantabangan-Masiway hydroelectric power plants in Nueva Ecija. The company also holds four wind energy service contracts covering projects in Burgos, Pagudpod, Bayog, and Pagali, all in Ilocos Norte.

EDC’s total installed capacity, inclusive of the hydroelectric plants in Nueva Ecija, stood at 1,261.4 MW as of Dec. 31, 2013. Also, EDC accounted for 7.5 percent of the total installed generating capacity of the country as of Dec. 31, 2012.

The company’s consolidated revenues for the period ending on Dec. 31, 2013 declined by 9.6 percent to P25.7 billion, from P28.4 billion. Net income similarly dipped to P5.6 billion (-47.5 percent) after a record performance in 2012 due to the effects of Supertyphoon “Yolanda,” which severely affected EDC’s operations in Leyte.