S&P downgrades PLDT credit rating by a notch

MANILA  -S&P Global Ratings downgraded PLDT Inc.’s investment grade by a notch to “BBB” from “BBB+” due to projected weakening of its credit position after incurring billions in budget overrun in the past years as it ramped up capital expenditure for 5G technology acquisition.

Still, the credit watcher maintained its “stable” outlook as it expects the telco giant’s revenues to grow by 4 percent to 5 percent in 2023 and 2024, providing some “cushion against rising debt.”

S&P noted that the listed company’s debt-to-Ebitda (earnings before interest, tax, depreciation and amortization) ratio would no “longer be commensurate with a ‘BBB+’ rating” because of high capex level.

“We forecast the ratio will weaken to 2.8x-3.0x in 2023, 2.6x-2.8x in 2024, and remain above 2.5x in 2025, despite rising earnings,” the credit watcher explained. S&P noted that PLDT’s debt-to-Ebitda ratio stood at 2.8x last year, which was above its usual 2.5x level.

A “BBB” rating, the second to the lowest in S&P’s investment grade scale, means a company has “adequate capacity to meet financial commitments, but more subject to adverse economic conditions.”

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