MANILA, Philippines - Aboitiz Power Corp. retained its PRS Aaa issue rating for its outstanding P3.89 billion corporate notes and P3 billion fixed-rate bonds.
PRS Aaa is the highest rating assigned by PhilRatings.
The corporate notes will mature in 2013 and 2015 while the fixed-rate bonds will mature in 2012 and 2014.
Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
The rating took into account the following: diversified portfolio of assets; experienced management team; very high profitability due to recent acquisitions; sustained high levels of cash and cash flows in relation to its debt service requirements; and its conservative stance in relation to debt.
Aboitiz Power is involved in both power generation and power distribution. It runs hydro power plants, geothermal power plants, coal-fired power plants and oil-fired power plants all over the country.
The company continues to be one of the country’s leading providers of energy, with a total attributable capacity of 2,051 megawatts (MW) as of the end of 2010. It also has an ownership stake in seven power distribution utilities.
Aboitiz Power has over 30 years of experience in the development, financing and operation of power generation facilities. It also has extensive knowledge of the power industry’s business and regulatory environment.
The company’s major generation asset acquisition of the Tiwi-Makban geothermal complex and its becoming the Independent Power Producer Administrator (IPPA) of the Pagbilao coal power plant, greatly boosted AP’s profitability.
“Due to the company’s profitable acquisitions in the past two years, it has been able to substantially increase its yearly cash flow and build up a sizeable cash reserve. These provide a significant cushion relative to the amount of debt obligations of the company,” PhilRatings said.
As of end-2010, AP had a cash reserve of P18.3 billion, with P27.3 billion in cash generated from operations during the year.
The company maintains a conservative stance in incurring debt despite major acquisitions it undertook in the last two years. Its greatly strengthened profitability will firm up its equity resulting in a continued improvement in capitalization. As of end 2010, its debt to equity ratio was at 1.33x, from 2.18x as of end 2009.
With the planned implementation of Retail Competition and Open Access (RCOA) beginning December 26, 2011 and with the government’s thrust towards the use of renewable energy, PhilRatings sees AP as well-placed to pursue opportunities which will result from such developments. The company also intends to bid for other IPPAs and for other hydro power plants that may be offered for privatization by government. AP is likewise in various stages of certain brown and Greenfield projects which will further strengthen its presence in the power industry.