Solar Tarlac gets highest rating for P4.15 billion bonds

MANILA, Philippines — Philippine Rating Services Corp. (PhilRatings) has assigned a credit rating of PRS Aa plus with a stable outlook to the P4.15-billion proposed green bonds of Solar Philippines Tarlac Corp.

Solar Tarlac is a joint venture between Solar Philippines Power Project Holdings Inc. and tycoon Enrique Razon’s Prime Metro Power Holdings Corp. In 2020, the two companies entered into a strategic partnership to develop the country’s largest portfolio of solar projects.

It is the sister company of Solar Philippines Nueva Ecija Corp. (SPNEC), the developer of a 500 MW solar project that is planned to be the largest solar project in Southeast Asia, and which is targeting to debut in the stock market on Dec. 17.

Proceeds of the P4.15-billion bonds will be used to refinance a P2.225-billion loan used for the construction of Solar Tarlac’s now operating 100 MW solar plant in Concepcion, Tarlac, and to fund the expansion of the plant to 150 MW.

PhilRatings said that 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,” it added.

“The rating is likely to be maintained or to remain unchanged in the next 12 months,” PhilRatings said of the stable outlook.

In coming up with the ratings, PhilRatings considered the following key 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 Manila Electric Co. (Meralco) and established solar irradiation data; e) general economic uncertainty due to the pandemic, but with opportunities which will benefit the company.”

Solar Tarlac has an agreement with Meralco, which covers almost all of the power expected to be generated by the plant.

For the IPO-bound SPNEC, it is targeting to raise up to P2.7 billion, with the first P1.3 billion to be used to complete the first 50 MW of the project, and amounts raised in excess of P1.3 billion primarily to be used to acquire land to expand the project beyond 500 MW.