SMC Global Power retains top credit rating

Published January 6, 2022, 1:53 PM

by James A. Loyola

SMC Global Power Holdings Corp. has retained its highest Issue Credit Rating of PRS Aaa, with a Stable Outlook, from Philippine Rating Services Corporation for its outstanding bond issuances amounting to P73.85 billion.

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.

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On the other hand, a Stable Outlook means the rating is likely to remain unchanged in the next 12 months.

In arriving at the rating, PhilRatings said it identified key strengths such as SMC Global Power’s leading market position, with a solid platform for expansion and its strong parent Company support.

It also noted SMC Global Power’s stable earnings and substantial cash flows, supported by the long-term offtake contracts of the Company, and ample liquidity in relation to debt servicing.

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PhilRatings also considered the resilient power industry, amidst the prevailing economic uncertainty caused by the COVID-19 pandemic, as electricity is considered essential.

SMC Global Power is one of the country’s largest power companies, controlling 4,714 megawatts (MW) of combined capacity as of June 30, 2021.

Its diversified mix of fuel supply consists of natural gas, coal, renewable energy such as hydroelectric power and battery energy storage systems.

Based on the total installed generating capacities reported in Energy Regulatory Commission (ERC) Resolution on Grid Market Share Limitation, the Company believes that its combined installed capacity comprises approximately 20 percent of the National Grid, 27 percent of the Luzon Grid and 8 percent of the Mindanao Grid, as of June 30, 2021.

Team Energy Sual Power Plant (photo by SMC Global Power/MANILA BULLETIN)

Given that the SMC Global Power’s existing capacity is still below the national market share limitations set by the Energy Regulatory Commission (ERC), the Company still has ample room for portfolio expansion.

According to management, the Company intends to further expand the Masinloc power plant by constructing additional units utilizing supercritical boiler technology.

In addition and as part of the Company’s diversification of its power portfolio away from traditional coal technologies, SMC Global Power plans to construct a combined cycle power plant in Batangas which will utilize regasified liquefied natural gas.

 
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