THE Manila Electric Company (Meralco), the country’s largest power distribution utility, said on Thursday it has secured a ‘BBB-‘ credit rating from debt watcher Standard and Poor’s (S&P) Global Ratings on the back of expectations that the company will be able to maintain its financial discipline in the long-term.
“The stable outlook reflects S&P’s anticipation that Meralco will grow moderately, maintain stable margins, and smoothly execute its capital expenditures and investments,” Meralco said in a filing to the Philippine Stock Exchange (PSE).
A company that is rated a “BBB-” investment grade indicates adequate capacity to meet financial commitments.
S&P upgraded Meralco’s long-term corporate credit rating from ‘BB+’.
A ‘BB’ investment grade, on the other hand, indicates that a company is less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
S&P also raised the Meralco’s Asean regional scale rating to ‘axA-‘ from ‘axBBB+’.
An ‘axA’ rating is hinged on a company’s strong capability to meet financial commitments. The rating also indicates that a firm may show vulnerability to adverse effects of changes.
On the other hand, an ‘axBBB’ rating shows certain economic conditions may lead to a weak capacity on the part of the borrower to meet financial commitments.