MANILA, Philippines — Pangilinan-led PLDT Inc. has shown commitment to move forward from its budget fiasco after it parted ways with executives involved in its finances, according to a unit of the Fitch Group.
CreditSights yesterday said PLDT’s bond prices suffered limited impact from the announcement that five of its key officials are leaving the firm either through resignation or retirement.
Based on records, PLDT saw its January 2031 bond tightened by five basis points, and its June 2050 bond widened by two bps following the disclosure of the departures.
CreditSights expects PLDT’s bond rates to trade at least 10 bps tighter than those of main rival, Globe Telecom Inc., on the back of its rated investment grade status. Likewise, PLDT recorded a net leverage of 2.7 times as against Globe’s 3.7 times at the close of 2022.
As such, CreditSights decided to maintain its market perform recommendation of Baa2/BBB/NR on PLDT. Also, it kept its forecast that PLDT will remain as one of the strongest corporate bond issuers in the Philippines based on credit fundamentals.
Likewise, CreditSights said that PLDT’s decision to separate with some of its executives signals its seriousness to reform corporate governance and long-term sustainability.
“We see a possibility that these officers were let go by the company after substantially completed external investigations found negligence or bad decision-making on their parts, [or] it could also be a case where senior management had to be held accountable for their actions, regardless of the extent of their fault,” CreditSights said.
In the short term, however, PLDT may face difficulty in filling in the vacancies in the boardroom given the extent of experience provided by those who left the telco giant.
“We think that the day-to-day operations of the company could be hampered, strategic directions could be less clear, and execution risks of ongoing projects could be higher. We also note that the PLDT management has yet to formally announce any interim and long-term replacement plans,” CreditSights said.
Last Monday, PLDT said that it parted ways with five of its C-level executives, including senior vice president, chief financial officer and chief risk management officer Annabelle Chua. PLDT issued no explanation for the boardroom cleanup.
In 2022, the led telco shook the capital market when it uncovered a P48 billion budget overspend, now down to P33 billion, in its capital expenditures between 2019 and 2022.
PLDT yesterday named senior vice president and PLDT group controller Danny Yu as officer in charge for finance; first vice president Bernadette Salinas for supply chain management; and first vice president and deputy network head Roderick Santiago for network.