Manila Water secures highest credit rating from local agency

Manila Water Corp. obtained a PRS Aaa rating from Philippine Ratings Services Corp., its highest credit rating, owing to the utility firm’s "very strong" capacity to meet its financial obligations.

PhilRatings said Manila Water had recorded very high marks in all the key performance indicators and business efficiency measures prescribed by the regulatory authorities.

PhilRatings considered Manila Water’s workable regulatory framework, well-planned capital expenditure and flexible financing programs to attain growth and efficiency targets; an effective management able to pursue complementary expansion and diversification strategies; sustained earnings and cash flow generation, providing strong coverage of interest and debt service.

PhilRatings also took note of Manila Water’s strong ownership support from its major stockholders, such as Ayala Corp., United Utilities Pacific Holdings and the International Finance Corp.

Manila Water secured recently a P2-billion loan facility with 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 water utility 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 Metro manila’s 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 to 5 billion per year in the next five years. A large part of this 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 Jalajala in Rizal province.