SMC Global Power Holdings Corp., one of the country’s biggest power-generation firms, plans to raise as much as P25 billion from a fresh retail bond offering.
The bonds have obtained the highest credit rating of PRS Aaa from local credit watcher Philippine Rating Services Corp. with a “stable” outlook.
This represents the first tranche of the San Miguel power arm’s three-year shelf registration of up to P60 billion.
PRS Aaa is the highest credit rating on PhilRatings’ long-term issue credit rating scale. This means that the bond is deemed to be of the “highest quality with minimal credit risk” and that the borrower’s capacity to meet its financial commitment on the obligation is “extremely strong.” A “stable” outlook means that the rating is likely to be maintained or to remain unchanged in the next 12 months.
The base size of the proposed bond issuance is P25 billion, with an option to upsize by another P5 billion.
PhilRatings said its rating on SMC Global Power was anchored on the following key strengths: SMC Global Power’s leading market position, with a solid platform for expansion; strong support from its parent company, San Miguel Corp. and SMC affiliates, the stability of earnings and substantial cash flow supported by the long-term off-take contracts of the company, and its ideal position to capitalize on the growing demand for electricity in the Philippines, supported by the expansion of the domestic economy.
SMC Global Power has a combined capacity of 4,197 megawatts (MW) as of end-September 2018. Its diversified mix of fuel supply consists of natural gas, coal and hydropower resources. The company’s combined capacity represents about 19 percent of the power supply of the national grid and 25 percent of the Luzon 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. By developing greenfield power projects in high-growth regions across the country and bidding for available power plants, the company believes it can continue its growth trajectory,” Philratings said.