 |
December 14, 2007 |
|
|
|
 |
MANILA ELECTRIC: S&P Affirms 'B-' Long-Term Issuer Credit Rating Standard & Poor's Ratings Services revised the outlook on its ratings on Manila Electric Co. (Meralco) to stable from negative. The 'B-' long-term issuer credit rating on Meralco was affirmed. "The outlook revision reflects an improvement in the regulatory environment, especially the resolution of a pending dispute on the unbundling of tariffs charged by Meralco, and in the company's liquidity position, which should result in adequate cash flow to service its maturing indebtedness in the near term," said Standard & Poor's credit analyst Anshukant Taneja. "While uncertainties in the operating environment and Meralco's high sensitivity to regulatory and judicial actions persist, Standard & Poor's expects that, in the short to medium term, these developments would not put a higher-than-anticipated stress on the company's credit profile." The outlook revision factors in the resolution of noncompliance of loan covenants and improvements in the company's debt maturity profile, which point toward a somewhat improved financial flexibility. The modest improvement in electricity demand in Meralco's service area also supports the outlook revision. Meralco is the dominant electricity distributor in the Philippines, accounting for about 60% of the electricity sold. It distributes electricity under a franchise agreement to 4.4 million customers in 25 cities and 86 municipalities. For the first nine months of 2007, Meralco reported nonconsolidated revenues of Philippine peso (PHP) 156 billion and net income of PHP2.8 billion, compared with revenues of PHP191 billion and net income of about PHP14 billion in fiscal 2006. "Standard & Poor's remains cautious of the company's ability to withstand adverse developments stemming from unfavorable regulatory decisions, such as delays in tariff adjustments that affect Meralco's liquidity," Mr. Taneja noted. "Further upside is limited, unless it is supported by a substantial improvement in regulatory arrangements and a higher level of predictability in the company's operating cash flows, combined with an improvement in financial profile." |
|
|
||
|
Today's Top Stories have been selected from the Troubled Company Reporter - Asia Pacific. To receive the Full TCR-AP please CLICK HERE.
