ACR plans P2-B CP issuance

Published January 15, 2021, 4:55 PM

by James A. Loyola

Alsons Consolidated Resources, Inc. (ACR) is planning to raise P2 billion from the issuance of commercial papers (CPs) as the first tranche of its new commercial paper program of up to P3.0 billion.

In relation to this, Philippine Rating Services Corporation (PhilRatings) said it has assigned the company with an Issuer Credit Rating of PRS A plus (corp.), with a Stable Outlook.

A company rated PRS A (corp.) has an above-average capacity to meet its financial commitments relative to that of other Philippine corporates.

The company, however, is somewhat more susceptible to adverse changes in circumstances and economic conditions than higher-rated corporates.

A Stable Outlook is assigned when a rating is likely to be maintained or to remain unchanged in the next twelve months.

PhilRatings said Alsons’ rating reflects its establishment of development projects in Mindanao that are supportive of the growth of the region’s power industry.

It also considered the company’s ability to establish joint ventures with strong partners for particular projects and its planned expansion projects which will further diversify its generation mix.

PhilRatings also noted Alsons’ improving profitability, despite the current crisis due to the COVID-19 pandemic; the challenges it encountered in securing bilateral contracts for its diesel power plants; and the lingering economic and market uncertainty caused by the COVID-19 pandemic. 

While the current capacity of ACR harnesses energy purely from non-renewable sources, it is already venturing into renewable energy (RE) generation through its hydroelectric power projects (HEPPs).

Of its 221 MW power projects in the pipeline, 116 MW will come from HEPPs while the balance of 105 MW will come from coal-fired power projects.

Once completed, ACR’s total capacity will be 689 MW. Coal will account for 315 MW (45.7 percent), diesel will account for 258 MW (37.4 percent), and hydro will account for the balance of 116 MW (16.8 percent).

Despite its improving profitability, PhilRatings said ACR still faces challenges in securing bilateral contracts for its diesel power plants. Of its operational diesel assets, only WMPC is fully contracted.

SPPC, on the other hand, is currently mothballed while Mapalad Power Corporation (MPC) is only 29.1 percent (30 MW) contracted.  “It is worth noting, as well, that given the reduced economic activity resulting from the COVID-19 pandemic, peak demand may take a hit in the next two years which may further lower the demand for diesel as a peaking plant,” the ratings agency said.