Petron Corporation, a unit of San Miguel Corporation, has been assigned by Philippine Rating Services Corporation (PhilRatings) the highest Issue Credit Rating of PRS Aaa, with a Stable Outlook for its proposed bond issuance.
The firm is planning to raise up to P18 billion from the planned offering which is the first tranche of Petron’s new shelf registration of up to P50 billion.
The proceeds of the proposed issuance will be used mainly for debt refinancing, including the Series A – P13 billion bonds maturing in October 2021. Proceeds will also be used for Petron’s power plant project in the Bataan Refinery.
The issue credit rating of PRS Aaa, with a Stable Outlook, was also maintained for the company’s outstanding P40 billion bonds.
Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
A Stable Outlook is defined as: “The rating is likely to remain unchanged in the next twelve months.” In assigning the ratings and Outlook, PhilRatings took into account the sustained retail presence and market leadership, both in the Philippines and Malaysia, albeit with a declining market share locally.
It also factored in the declining profitability driven by the decrease in sales volume due to the pandemic but maintenance of ample liquidity and financial flexibility in relation to debt servicing.
PhilRatings also considered Petron’s experienced management and synergies with companies belonging to the San Miguel Group; and the economic uncertainty, rising inflation, and the decline in demand attributable to the COVID-19 pandemic.
Petron continued to lead in the local oil industry in 2020, accounting for a market share of 20.1 percent. It can be noted, however, that it declined from 30.7 percent in 2016.
This was a result of intense competition from Independent Oil Players which increased their share of the market from 34.2 percent in 2016 to 48.8 percent in 2020.
In Malaysia, Petron continued to be the third largest player with a market share of 21.7 percent. In the local retail Liquefied Petroleum Gas (LPG) segment, Petron reportedly maintained its top position in the market.