MNTC refinances P2.3B worth of corporate notes

Manila North Tollways Corp. (MNTC), operator of the North Luzon Expressway, is refinancing P2.3 billion worth of corporate notes in a bid to lower interest costs and increase profitability.

In a statement on Thursday, Philippine Rating Services Corp. (PhilRatings) announced that MNTC had made early payments for its fixed rate corporate notes last Dec. 15.

These notes, which PhilRatings graded as PRS Aaa—the highest mark the firm gives out—are not due until late 2013.

“MNTC’s decision to prepay the notes stemmed primarily from the company’s liability management program for the year which aims to reduce the average cost of its loans and extend the tenor of its maturing loans,” PhilRatings said.

MNTC is a wholly-owned subsidiary of Metro Pacific Tollways Corp., the road investment arm of Manuel V. Pangilinan’s business empire.

“The prepayment of the remaining notes completes the refinancing initiative that the company implemented early this year as the company transitioned from project finance to a standard corporate finance structure,” PhilRatings said.

Late last year, MNTC said it would refinance as much as P12 billion worth of debt to take advantage of lower interest rates available from local banks and retail bond offerings. This aims to improve the company’s profitability even in the face of slowing traffic growth that weighs on revenues.

Officials have said the company’s growth has been constrained by lower traffic volumes, caused mainly by the recent imposition of value added taxes, which made the use of toll roads more expensive for motorists.

Volatile fuel prices have also forced many motorists to leave their cars at home and instead take public transport, resulting in a reduction of cars passing through highways.