Phoenix Petroleum’s P7-billion commercial papers get top credit rating

MANILA, Philippines — Phoenix Petroleum Philippines Inc., the country’s leading independent oil company, is offering as much as P7 billion worth of new commercial papers to fund its working capital requirements and refinance existing short-term loans.

The offering was assigned an issuer credit rating of PRS Aa minus with a stable outlook by local credit watchdog Philippine Rating Services Corp.

It forms part of of its planned registration of up to P10 billion CPs with the Securities and Exchange Commission.

An issuer credit rating is an opinion on the general and overall creditworthiness of the issuer, evaluating its ability to meet all its financial obligations within a time horizon of one year.

A company rated PRS Aa (corp.) has a strong capacity to meet its financial commitments relative to that of other Philippine corporates.

In issuing the rating, PhilRatings took into account the continuous growth of the company’s retail presence and market leadership, particularly among independent oil players; significant growth potential given the entry into other related or complementary business ventures, and improving sales volume, but which is offset by rising costs, expenses, and finance charges.

Phoenix markets refined petroleum products and lubricants to both retail and commercial/industrial customers. The company’s terminaling and hauling services, on the other hand, involve the storage of petroleum products and the transport of fuels to Phoenix’s industrial customers.

Phoenix was able to increase its number of retail stations from 505 in 2016 to 530 in 2017. As of the end of September, the number of stations further increased to 558. For both periods, bulk of the growth was in Luzon.

Major oil companies – Petron Corp., Pilipinas Shell Petroleum Corp. and Chevron Philippines –  continued to account for the bulk of the market, with a 53.4 percent  share of total demand.

Among the independent players, Phoenix led the pack, accounting for a 7.1 percent market share from 6.2 percent  in 2017, making it the fourth biggest oil player in the country.

Phoenix has entered the liquefied petroleum gas (LPG), asphalt, fuel trading, convenience store and digital payment platform businesses. These ventures will maximize the potential of its distribution network and enlarge its exposure in the value chain of petroleum products.

In the first nine months of 2018, Phoenix reported a net income of P1.3 billion, down 8.3 percent from the same period a year ago even as revenues almost doubled to  P65 billion as the growth in revenues was offset by the 100.3 percent surge  in expenses.