Manila Water secures P2-B loan

Manila Water Co. has obtained a P2-billion loan facility from a group of local financial institutions, the Ayala-led utility firm said in a disclosure to the Philippine Stock Exchange.

The facility, arranged by ING Bank, was extended by a syndicate composed of Sun Life of Canada, Insular Life Assurance, Security Bank, Equitable PCI Bank, Chinabank, Robinsons Savings Bank and ING Trust.

Manila Water said the facility is tightly priced with a seven-year tenor and allows the firm to establish new banking relationships with a number of reputable institutions.

It marks the company’s maiden peso term issuance and was oversubscribed nearly four times from an initial launch amount of P1 billion.

The loan facility forms part of the financing plan needed to fund Manila Water’s capital investment program within the East Zone.

"The signing of the P2-billion term loan facility marks a significant event for Manila Water because it affirms the financial community’s confidence in the company. Through this peso-denominated loan, the company will be able to take advantage of the improving domestic borrowing rates, while it will also be able to better manage the adverse impact of foreign currency fluctuations. All of these ultimately redound to the benefit of our more than five million customers in the East Zone," said Manila Water President Antonino T. Aquino.

The company announced early this year that it has lined up projects amounting to P4.5 billion in 2006 alone and will spend approximately P4 billion to P5 billion per year in the next five years. A large part of this capex budget will be used to extend the water network to the high-growth areas of Taguig, Antipolo, Taytay, Cainta, San Mateo, Montalban, Angono, Binangonan, Baras and Jala-jala in Rizal province.

Manila Water has also allocated significant amounts to improve sewer and sanitation services.

For the past nine years, Manila Water has invested a total of P19 billion in capital expenditure and concession fees to improve the water and waste water services in the East Zone. Through the company’s relentless pipe replacement program, it has reduced system losses to 30.2 percent as of June 2006, from a high of 63 percent when it started operating the concession in 1997.

The water recovered from system losses increased the volume of water delivered to customers.

Consequently, billed volume increased from the 1997 level of 440 million liters per day (mld) to 933 mld as of June 2006.