San Miguel power unit raises P40B from bond sale

SMC Global Power Holdings Corp. (SMCGP), the power arm of conglomerate San Miguel Corp., has raised P40 billion from selling fixed-rate bonds.

The bond offering involves the issuance of P30 billion, with an oversubscription of up to P10 billion. It represents the first tranche of the firm’s three-year shelf-registered program amounting to P60 billion.
SMCGP said the latest transaction “drew significant interest from investors,” prompting them to issue more bonds.

The Philippine Rating Services Corp. (PhilRatings) assigned an issue credit rating of PRS Aaa with a stable outlook.

PhilRatings explained debt rated with PRS Aaa was deemed  to have the “highest quality with minimal credit risk” while a stable outlook means the rating is likely to be maintained in the next 12 months.

The local debt watchdog rendered the highest rating based on SMCGP’s leading market position, with a solid platform for expansion and strong support from its parent firm SMC.

It also took into consideration the stability of earnings and substantial cash flows, supported by the long-term offtake contracts of the company, albeit margins are declining as well as its conservative capital structure considering a capital-intensive industry.

“The funds provided by these Bonds come at an opportune time as we continue with our commitment to provide the country with reliable power supply, amidst present challenges in the global fuel market,” said SMC president and CEO Ramon Ang.

Amid global fuel cost and supply woes caused by the ongoing Russia-Ukraine conflict, SMC’s energy business said it remained on track to minimize the country’s dependence on coal as part of its parent firm’s sustainability goals.

Last month, SMCGP completed 500-megawatt hours (MWh) of battery energy storage system (BESS) facilities being constructed nationwide, the largest of its kind in Southeast Asia.

Ang said SMCGP was expecting to bring by year-end the total battery capacity to 700 MWh and 1,000 MWh by the end of 2023, once all 32 BESS facilities come online.

He also said the company’s BESS network, dubbed “the very first and largest battery network in the Philippines by far,” would be key to ensuring reliable power supply nationwide even in remote areas.