Philippine Rating Services Corporation (PhilRatings) maintained the highest Issue Credit Rating of PRS Aaa, with a Stable Outlook, for NLEX Corporation’s total outstanding Fixed-rate Bonds worth P8.6 billion.
In a statement, the ratings agency said 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 assigned when a rating is likely to be maintained in the next 12 months.
PhilRatings said the rating and Outlook were assigned given the Company’s well-managed toll franchise, complemented by a solid pipeline of projects; and the strong demand for its toll services, supported by greater mobility due to the lifting of COVID-19 restrictions.
It also considered the Company’s manageable capital structure supported by retained earnings and its strong cash flows backed by sustained earnings.
NLEX Corp. is a subsidiary of Metro Pacific Tollways Corporation (MPTC), the largest toll road network operator in the country. It is the concessionaire of the North Luzon Expressway (NLEX), Subic–Clark–Tarlac Expressway (SCTEX), and the NLEX Connector Road.
Two of the Company’s major ongoing projects are the NLEX Connector Road and the third Candaba Viaduct.
In 2023 and in 2024, the Company expects the traffic volumes in the NLEX and the SCTEX to increase, albeit at much slower rates than in 2022.
Notwithstanding the Company’s expectation of slower traffic volume growth in 2023, PhilRatings notes that the average daily traffic for the NLEX and the SCTEX in the first three months of the year continued to significantly grow by 20 percent and 23 percent, respectively.
On May 5, 2023, World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus declared an end to COVID-19 as a global health emergency.
Considered as a major step towards the end of the pandemic, it can usher in further recovery of domestic and foreign travel in the coming years. This, in turn, will translate to strong traffic volume growth for the Company’s expressways going forward.
Moreover, the successful completion of the infrastructure flagship projects (IFPs) under the government’s ‘Build Better More’ Infrastructure Program can boost the economic development in several parts of the country, particularly in Metro Manila and in Central Luzon, which will, in turn, fuel the demand for the Company’s expressways.