PSALM, Napocor also get outlook upgrades

MANILA, Philippines - New York-based Moody’s Investor Service has upgraded its outlook on the existing debts of two state-run energy firms following an improvement on the Philippines’ sovereign credit rating outlook.

Moody’s revised its outlook on bonds of the Power Sector Assets and Liabilities Management Corp. (PSALM) and National Power Corp. (Napocor) to positive from stable.

In a statement, Moody’s said it affirmed the Ba2 rating -- two notches below investment grade -- for the debt papers of Napocor and PSALM.

“The rating action follows Moody’s decision to change the outlook of the Philippine government’s Ba2 long-term foreign-currency and local-currency ratings to positive from stable,” the international credit watcher said.

The Aquino administration received its sixth upgrade barely in the first half of his six-year term after Moody’s upgraded the credit rating outlook of the Philippines to positive from stable, paving the way for a rating upgrade within the next six to 18 months.

“PSALM’s ratings are underpinned by its distinct policy role and its close integration with the government,” said Mic Kang, Moody’s vice-president and senior analyst.

PSALM, formed by the 2001 Electric Power Industry Reform Act, is the state firm in charge of privatizing government power assets as well as managing Napocor’s power plants and debt.

Kang said the government has provided unconditional and irrevocable guarantees on debt issued by PSALM and those transferred from Napocor.

To date, Napocor has transferred to PSALM more than 99 percent of its rated US dollar bonds, including the $300 million due in 2028 and $160 million due in 2016.

The sovereign credit outlook upgrade also benefited Napocor, Moody’s said.

Outstanding rated bonds of Napocor amount to $452,000 due in 2028 and $133,000 that will mature in 2016 as most debts were shouldered by PSALM.