Mla Water borrows P1.5B for east zone expansion

Manila Water Co. has secured a P1.5-billion loan facility from several financial institutions to be used for its massive capital investment program within the east zone of Metro Manila, the company told the Philippine Stock Exchange.

The loan, arranged by ING Bank, was extended by Sun Life of Canada, Security Bank, Equitable PCIBank and Land Bank of the Philippines.

Manila Water said the loan, which will be drawn in two tranches, will have a term of seven years.

Through this peso-denominated loan, the company will be able to take advantage of improving domestic borrowing rates.

Manila Water earlier said it has set aside P4.5 billion this year and plans to spend P4 billion to P5 billion every year over 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 in Metro Manila and the towns of Antipolo, Taytay, Cainta, San Mateo, Montalban, Angono, Binangonan, Baras and Jala-jala in Rizal province. The company 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 wastewater services in the east zone. Through its relentless pipe replacement program, the company has reduced system losses to 30.2 percent as of June 2006, from a high of 63 percent when it started in 1997.

As of end-June this year, the company’s billed volume increased to 933 million liters per day from only 440 mld in 1997.

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

Philratings said it 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.