Lopez-led EDC bonds get highest credit rating

MANILA, Philippines - Local credit rater Philippine Rating Services Corp. (PhilRatings) has maintained the highest score for Lopez-led Energy Development Corp.’s P12 billion bonds.

EDC’s outstanding P12 billion bonds were rated PRS Aaa by PhilRatings, the company said in a statement.

“Obligations rated PRS Aaa are of the highest quality with minimal credit risk,” PhilRatings said.

“The obligor’s capacity to meet its financial commitment on the obligation is extremely strong,” it added.

The bonds were issued in two tranches, with P8.5 billion due in June 2015 and P3.5 billion due in December 2016.

In maintaining the rating, PhilRatings considered EDC’s reinforced revenue stream and strong cash flow; enhanced standing as the leading vertically integrated geothermal power producer in the country; and financial flexibility including improved debt profile that lessens various operational and financial risks.

EDC owns the 150-megawatt (MW) Bacon-Manito (BacMan) geothermal plants and the 305-MW Tongonan I and Palinpinon power plants.

“By managing both steam production and electricity generation, EDC benefits in terms of synchronized decision making processes and operational cost savings,” Philratings said.

The credit rater said the power firm continues to generate a healthy stream of revenues from its current operating facilities despite the delays encountered in the start of commercial operations for the BacMan facility and the scheduled phased rehabilitation of the Palinpinon-Tongonan facility.

EDC earlier targeted the BacMan geothermal plants to run for about three months this year.

Philratings said the bulk of EDC’s output is contracted and tied to medium- to long-term take-or-pay contracts, providing sustainable and predictable cash flows.

The Lopez-led power producer posted a net income attributable to the parent firm of P7.1 billion, reversing the net loss of P670 million a year ago on the back of higher revenues of its units.

“This positive trend in profitability is expected to continue going forward, particularly when the BacMan plant commences full operations and the Palinpinon-Tongonan plant completes its rehabilitation,” PhilRatings said.

EDC is the world’s second largest integrated producer of geothermal power. It is into the exploration, development and optimization of geothermal fields, as well as the operation and maintenance of the geothermal power plants with an aggregate capacity of 1,130 MW.

EDC also has investments in wind energy projects in Ilocos Norte and other provinces.      – With Zinnia dela Peña