Philippine Rating Services Corporation (PhilRatings) has maintained the highest Issue Credit Rating of PRS Aaa, with a Stable Outlook, for SMC SLEX, Inc. ’s (SMC SLEX) outstanding P2.5 billion Fixed-rate bonds.
SMC SLEX, which is part of the San Miguel Group, was incorporated primarily to engage in the rehabilitation, construction and expansion of the South Luzon Expressway (SLEX).
Obligations rated PRS Aaa are of the highest quality with minimal credit risk and the obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
A Stable Outlook, on the other hand, indicates that ratings are likely to be maintained in the next 12 months.
PhilRatings said the assigned rating takes into account SMC SLEX’s expansion of concession assets and continuing enhancement of toll operations and the strong demand for its toll services, supported by greater mobility.
Also taken into consideration is the Company’s healthy liquidity, backed by strong cash flows from toll operations, and the continued push of the government to improve the country’s infrastructure environment.
SMC SLEX is the concessionaire of the SLEX, a 36.1-kilometer (km) toll road that links major economic centers in Metro Manila to the southern provinces of Luzon. The SLEX is an integrated expressway composed of four toll roads, three of which are currently operational.
Currently under construction is Toll Road 4 (TR 4), which is a 66.7-km toll road expansion of the SLEX and consisting of a four-lane toll way extending from Sto. Tomas, Batangas to Lucena City, Quezon. TR 4 is expected to cut the travel time between Sto. Tomas and Lucena, from four hours to one hour.
In December 2022, the infrastructure arm of the San Miguel Group, SMC Infrastructure, executed the Seamless Project in its southern tollways.
The project trimmed the usual five toll stops to only two toll stops, for both northbound and southbound travelers, cutting the overall transaction time spent in toll plazas for motorists.
The project runs along the SLEX, Southern Tagalog Arterial Road (STAR), NAIA Expressway (NAIAX), and the entire Skyway System (Stages 1,2, and 3).
According to San Miguel Corporation President Ramon Ang, this program is also part of the Group’s preparation for the full integration of the Interoperability Project of the government which aims to achieve seamless travel across major expressways in Luzon.
As economic activities steadily recovered, traffic volume continued to grow in 2022, notably exceeding the 2019 pre-pandemic annual average daily traffic (AADT) by 2.8 percent.
The official announcement on May 5, 2023 from the World Health Organization (WHO) declaring that the COVID-19 pandemic has ceased to be a global health emergency of international concern is expected to spur greater public mobility and promote traffic growth in the expressways, as restrictions are set at the lowest level.
The uptrend in AADT is projected to continue, as traffic volume normalizes in the expressway. SMC SLEX sees the recovering industrial and socio-economic activities in the CALABARZON region as supportive of the projected growth in average daily traffic volume.
The gradual commencement of operations of the TR 4 is expected to similarly support higher traffic volume. Given these, revenues from toll operations are seen to post a healthy growth over the projected period.