Alsons sustains positive credit rating on CP issuance

Alcantara-led Alsons Consolidated Resources Inc., (ACR) was able to maintain its ‘stable outlook’, relative to the P3 billion worth of commercial papers (CP) issuance that the company has resorted to in raising additional funding for its ongoing projects. The positive rating of the company has been rendered recently by the Philippine Rating Services Corp. (PhilRatings) and this serves as a testament to the company’s soundness to honor repayments of financial obligations. In a statement, it was specified that the PRS Aa rating entails “strong capacity to meet its financial commitments relative to other Philippine corporates.” It was similarly qualified by PhilRatings that the assignment of ‘stable outlook’ infers that this is “likely to be maintained or to remain unchanged in the next twelve (12) months.” The factors assessed and considered by the rating agency on Alsons had been: the commencement of operations of the Wholesale Electricity Spot Market (WESM) in Mindanao; as well as the well-anticipated completion of the Mindanao-Visayas Interconnection Project (MVIP) which may finally be concretized this year. For the commercial operations of the spot market in the southernmost power grid, in particular, this is seen providing alternative market for power generators in Mindanao, where Alsons is a key industry player of the restructured power sector. Even the company’s target of broadening its investments in the renewable energy sector will also gain ‘sweetener’ when it comes to hurdling market risks, because WESM-Mindanao would be able to absorb capacity that are not covered by bilateral contracts. Additionally, bringing the MVIP on stream could widen the market of Alsons’ generated capacity – as any surplus in Mindanao can already be shared to the power supply-starving grid of Luzon and even Visayas grid. The technology diversification of the company on its power projects was likewise cited by PhilRatings as added succor to its favorable credit rating; in addition to “the company’s ability to establish joint ventures with strong partners for particular projects,” as well as “ample liquidity, supported by positive operating cash flows.” As emphasized by ACR Chairman Nicasio I. Alcantara, “eventually, renewable energy sources will comprise at least half of ACR’s long-term energy mix.” The company is already in the process of completing its first hydro facility in Sarangani province – that is the 14.5MW Siguil hydropower venture; then this will be followed by pipelined solar and other hydropower projects in Zamboanga del Norte; and Bago River in Negros Occidental. The Alcantara firm had already listed with the Philippine Dealing and Exchange Corporation (PDEx) last December the P620 million initial trance of its commercial papers issuance. By far, this is already the third CP program of the company since it has been taking this option on its fund raising activities to bankroll projects as well as in building up its working capital requirements. CPs are typically issued as a form of short-term facility that enables corporations to raise capital quickly; and these are sold to investors who are looking for short-term investments with relatively low risk.