MANILA, Philippines – South Luzon Tollway Corp., a unit of conglomerate San Miguel Corp., obtained the highest credit grade from the Philippine Rating Services Corp. for its planned issuance of P7.3 billion worth of fixed-rate bonds.
The issue was given a PRS Aaa rating, which are deemed of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment is extremely strong.
The rating was issued based on SLTC’s competitive market position; its ample cash flows to service debt obligations; its well experienced management team and its improving profitability.
SLTC, which is 80 percent owned by San Miguel-led MTD Manila Expressways Inc. and 20 percent by the state-run Philippine National Construction Corp., has a 30-year concession to operate and maintain the South Luzon Expressway (SLEX) or until February 2036.
San Miguel is one of the largest and most diversified conglomerates in the country, with businesses and investments in beverages, food, packaging, fuel and oil, power and infrastructure.
BDO Capital and Investment Corp., PNB Capital and Investment Corp. and Standard Chartered Bank were appointed as joint lead underwriters and bookrunners for the proposed bond offering.
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The company is currently completing the construction of tollroad 4 (RT4), a new 57.6 kilometer four-leaf tollroad from Sto. Tomas, Batangas to Lucena, Quezon.
Targeted for completion in 2019, RT4 is estimated to cost around P12 billion.
The SLEX serves as a gateway for travelers going to Southern Luzon from Metro Manila and vice versa. It is a key infrastructure for regional transportation, commercial and industrial development, and tourism in the southern areas, particularly the Cavite, Laguna, Batangas, Rizal and Quezon (Calabarzon) economic region.
According to the Toll Regulatory Board (TRB), utilizing the SLEX would benefit motorists in terms of Value of Time (VOT) saved of almost 50 percent and vehicle operating cost saved of P1.38 per kilometer.
“Going forward, the SLEX is seen to benefit from the rapid growth of the region in terms of traffic volume as it helps facilitate the mobility of people, goods and services between Metro Manila and the Calabarzon region,” PHilRatings said.
SLTC posted a net income of P2.4 billion last year, up 16 percent from P2.1 billion in 2013. Revenues inched up 4.9 percent to P4.4 billion as a result of 6.9 percent growth in traffic volume.
Cost of operations fell by 1.4 percent. Operating expenses and other charges likewise were lower at P84.8 million and P415.8 million, respectively.
“Internally generated cash will remain strong going forward, placing the company in a good position to settle its proposed bonds as these mature in as short as 5.25 years to as long as 10 years,” PHilRatings noted.
