S&P lifts Meralco rating

MANILA, Philippines—Standard & Poor’s Rating Services has raised the long-term corporate credit rating of Manila Electric Co. (Meralco) to BB- from B+ due to the utility’s improved business and financial risk profiles.

Meralco’s “competitive position and cash flow stability have strengthened, supported by a sustained improvement in the regulatory landscape,” the global credit watchdog said when it upgraded the rating of the country’s biggest power distributor.

It also upgraded Meralco’s business risk profile as “fair,” from its previous assessment of “weak,” noting that the firm’s dominant position in the local power distribution sector supported the company’s business risk profile.

Meralco posted an 11-percent growth in its consolidated core net income to P12.9 billion in the first nine months of 2012 from P11.7 billion a year ago. Also, consolidated revenue increased by 14 percent to P214.7 billion as of end-September.

“We forecast Meralco’s Ebitda [earnings before interest, taxes, depreciations and amortization] growth to remain strong in 2012 due to increasing customers and low distribution system losses. We also expect steady electricity sales in 2012 and 2013,” said Rajiv Vishwanathan, S&P credit analyst.—Amy R. Remo