Moody's upgrades PSALM, Napocor debt ratings

MANILA, Philippines - Global credit watcher Moody’s Investor Service has upgraded anew its debt ratings for the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) and National Power Corp. (Napocor).

In a statement, Moody’s said the credit rating upgrade followed its decision to raise the Philippine government’s long-term foreign currency and local currency ratings to Ba2 from Ba3.

“In light of PSALM’s 100 percent ownership by the Philippine government, its distinct policy role — as mandated by law to restructure and reform the Philippine power sector — as well as the government’s intention to assume any remaining assets and liabilities at the end of its corporate life, Moody’s views PSALM as an extension of the government,” said Jennifer Wong, a Moody’s analyst.

“All debt issued by PSALM is unconditionally and irrevocably guaranteed by the government. As such, PSALM’s rating is closely integrated with, and strongly linked to, the government’s credit quality.”

She said the principal methodology used in this rating was for regulated electric and gas utilities published in August 2009.

PSALM, wholly-owned and controlled by the Philippine government, was established in 2001 to take ownership of and manage all generation-related assets, liabilities, contracts with independent power producers, real estate and other disposable assets of the Napocor, including the National Transmission Corp. (TransCo), and to privatize and dispose of these assets to liquidate Napocor financial obligations.

Napocor now is the principal supplier of off-grid electricity in the Philippines.