Meralco bond issue gets high credit rating

MANILA, Philippines - Domestic credit rating agency Philippine Rating Services Corp. (PhilRatings) has assigned its top score of PRS Aaa to Manila Electric Co.’s proposed P15-billion debt issue.

Meralco, the country’s biggest power distributor, earlier announced plans to borrow P15  billion for its capital expenditure requirements and general funding needs.

The rating was assigned for a total amount of up to P20 billion in fixed rate bonds, with amounts falling due in 2020 and 2025. The put option may be exercised on the fifth year for the bonds due in 2020 and on the 10th year for the bonds due in 2025, PhilRatings said.

A PRS Aaa rating is the highest quality rating with minimal credit risk, the highest assigned by PhilRatings. It means that the obligor’s capacity to meet its financial commitments on the obligation is extremely strong.

“The rating takes into consideration the following factors: Meralco’s robust cash flows and sustained profitability; its dominant franchise; its experienced management team and shareholders; as well as its conservative capital structure and strong financial flexibility,” PhilRatings said.

Meralco is the largest electric power distribution company in the Philippines with a franchise area covering 9,337 square kilometers. It has 5.3 million customers in Metro Manila, Bulacan, Cavite and Rizal, and certain municipalities and barangays in the provinces of Batangas, Laguna, Pampanga and Quezon.

In the first nine months of the year, Meralco posted a consolidated reported net income of P13.6 billion, with a net profit margin of 6.6 percent.