SMC Global Power bonds maintain top credit rating

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Philippine Rating Services Corporation (PhilRatings) has retained its PRS Aaa rating, with a stable outlook, for SMC Global Power Holdings’ outstanding bond issuances worth Php73.8 billion.

PRS Aaa is the highest credit rating on PhilRatings’ long-term issue credit rating scale. Obligations rated PRS Aaa are of the highest quality with minimal credit risk, meaning the obligor’s capacity to meet its financial commitment on the obligation is extremely strong. A Stable Outlook, meanwhile, means that the rating is likely to be maintained in the next 12 months.

PhilRatings cited San Miguel Corporation’s (SMC) power generation arm for its leading market position, with a solid platform for expansion; a strong parent company support; the stability of earnings and substantial cash flows, supported by the firm’s long-term offtake contracts; and ample liquidity in relation to debt servicing. PhilRatings also considered the resilient power industry amid the prevailing economic uncertainty caused by the COVID-19 pandemic, as electricity is considered essential.

SMC Global Power is the country’s second largest and Luzon’s biggest power generator, based on data from the Department of Energy.

The company announced last year that it invested $1 billion to build 31 battery energy storage system facilities simultaneously nationwide with a total capacity of 1,000 megawatts (MW). Of these projects, 690MW are targeted to begin operations early this year.

It also dropped plans to build coal power plants, while ramping up efforts to build cleaner renewable energy and liquefied natural gas projects.