Philippine Rating Services Corporation (PhilRatings) has assigned a credit rating of PRS Aa plus with a Stable Outlook to Solar Philippines Tarlac Corporation’s (Solar Tarlac) proposed green bonds of up to Php 4.15 billion.
Solar Tarlac is a joint venture between Solar Philippines Power Project Holdings, Inc. (Solar Philippines) and tycoon Enrique Razon’s Prime Metro Power Holdings Corporation (Prime Power). In 2020, the two companies entered into a strategic partnership to develop the country’s largest portfolio of solar projects.
Proceeds of the bonds would be used to refinance a Php 2.225 billion loan used for the construction of Solar Tarlac’s now operating 100 MW solar plant in Concepcion, Tarlac, and to fund the expansion of the plant to 150 MW.
“Obligations rated PRS Aa are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitments on the obligation is very strong. A plus (+) or minus (-) sign may be used to further qualify a rating,” PhilRatings said.
“On the other hand, an Outlook is an indication as to the possible direction of any rating change within a one year period and serves as a further refinement to the assigned credit rating for the guidance of investors, regulators, and the general public. A Stable Outlook is defined as: “The rating is likely to be maintained or to remain unchanged in the next 12 months,” PhilRatings added.
“PhilRatings considered the following key rating factors in the assignment of the rating and Outlook: a) significant market position in the solar energy industry of the Project Sponsors, albeit with a relatively short track record; b) very manageable construction risk; c) asset and customer concentration risk; d) market risk mitigated with a 20-year Take-or-Pay Power Purchase Agreement with Manila Electric Company (Meralco) and established solar irradiation data; e) general economic uncertainty due to the pandemic, but with opportunities which will benefit the company,” PhilRatings noted.
Solar Tarlac’s supply agreement with Meralco covers almost all of the power expected to be generated by the plant. Meralco is the country’s largest distribution utility, with a solid financial and liquidity position. It has an outstanding issue credit rating of PRS Aaa, with a Stable Outlook, from PhilRatings for its outstanding Php 7.0 billion bonds due in 2025.
The sister company of Solar Tarlac is Solar Philippines Nueva Ecija Corporation (SPNEC), the developer of a 500 MW solar project that is planned to be the largest solar project in Southeast Asia.
SPNEC could raise up to Php 2.7 billion, with the first Php 1.3 billion raised primarily to be used to complete the first 50 MW of the project, and amounts raised in excess of Php 1.3 billion primarily to be used to acquire land to expand the project beyond 500 MW.
SPNEC’s offer period is planned for December 1 to 7, 2021, with a tentative listing date on the Main Board of the PSE on December 17, 2021, based on the Listing Notice posted on the PSE EDGE website.