MNTC secures top credit rating for P7-B bonds

MANILA, Philippines - The tollways arm of infrastructure giant Metro Pacific Investments Corp. (MPIC) received the highest rating from Philippine Ratings Services Corp. (PhilRatings) for its proposed P7 billion bond issuance.

PhilRatings assigned a credit rating of PRS Aaa to seven-year fixed rate bonds due 2021 and 10-year bonds due 2024 to be issued by Manila North Luzon Tollways Corp. (MNTC).

The company likewise has an outstanding issuer credit rating of PRS Aaa after the most recent review conducted by PhilRatings in October last year.

Obligations rated PRS Aaa are of the highest quality with minimal credit risk and the obligor’s capacity to meet its financial commitment on the obligation is extremely strong.

Furthermore, companies rated PRS Aaa have a very strong capacity to meet their financial commitments relative to that of other Philippine corporations.

PhilRatings cited MNTC’s sound liquidity and ample buffer in terms of operating margins to comfortably service debt obligations and be financially flexible against external shocks as well as adequate capital structure that is expected to further improve over time given consistently good profitability, strengthening the company’s equity position through retained earnings.

The rating agency also noted the robust toll road industry with MNTC’s well-managed toll franchise and resilient demand for toll services.

MNTC got the highest credit rating from PhilRatings amid the delay in the approval of its regular and contractual adjustments of toll rates by the Toll Regulatory Board (TRB).

To address this, MNTC intends to be flexible in terms of its capital expenditures and at the same time aims to grow its other income including advertising revenues, leasing, and rest-stop development.

Proceeds of the fund raising activity would be used primarily by MNTC to partially fund the construction of the 5.65-kilometer Segment 10 of the North Luzon Expressway (NLEX) project connecting the MacArthur Highway in Valenzuela City, to circumferential road (C3) Road in Caloocan City.

After completing Segment 9 which is a 2.4-kilometer  road traversing NLEX in Valenzuela City to MacArthur Highway, MNTC is pursuing three major road projects worth over P30 billion. This include the P1.6 billion, four-lane divided at-grade expressway stretching 2.42 kilometers from the existing Smart Connect interchange to MacArthur Highway as well as the P10.5 billion 5.64 kilometers of four-lane divided elevated expressway from MacArthur Highway to circumferential road – 3 (C-3).

Furthermore, the newest is Segment 10.2 or the Connector Road stretching eight kilometers from C-3 to Polytechnic University of the Philippines (PUP) in Sta. Mesa.