Solar Philippines offering Php4.15B in green bonds

Solar Tarlac

In addition to its initial public offering (IPO) for its “solar ranch” in Nueva Ecija, Solar Philippines will be offering green bonds of up to Php4.15 billion, particularly for its Tarlac joint venture with tycoon Enrique Razon.

In a statement, the Philippine Rating Services Corporation (PhilRatings) said it gave Solar Philippines Tarlac Corporation’s green bonds a “very strong” PRS Aa plus credit rating with a stable outlook.

“Obligations rated PRS Aa are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitments on the obligation is very strong. A plus or minus sign may be used to further qualify a rating,” PhilRatings said.

“On the other hand, an Outlook is an indication as to the possible direction of any rating change within a one year period and serves as a further refinement to the assigned credit rating for the guidance of investors, regulators, and the general public. A Stable Outlook is defined as: ‘The rating is likely to be maintained or to remain unchanged in the next 12 months,’” PhilRatings added.

The proceeds of the bonds would be used to refinance a Php2.23 billion loan used for the construction of Solar Tarlac’s now operating 100-megawatt (MW) solar plant in Concepcion town and to fund the plant’s expansion 150MW.

“PhilRatings considered the following key rating factors in the assignment of the rating and Outlook: a) significant market position in the solar energy industry of the Project Sponsors, albeit with a relatively short track record; b) very manageable construction risk; c) asset and customer concentration risk; d) market risk mitigated with a 20-year Take-or-Pay Power Purchase Agreement with [the] Manila Electric Company (MERALCO) and established solar irradiation data; e) general economic uncertainty due to the pandemic, but with opportunities which will benefit the company,” PhilRatings noted.

Solar Tarlac’s supply agreement with MERALCO covers almost all of the power expected to be generated by the plant.

Solar Tarlac’s sister company Solar Philippines Nueva Ecija Corporation will have its IPO from December 1-7, which intends to raise up to Php2.7 billion for the 500MW “solar ranch” in Peñaranda town. Solar Philippines targets the project to become Southeast Asia’s largest solar venture.