Meralco plans overseas borrowing to finance power generation business

• 11 years ago (2013-09-04)
• David Flin

North America 1021

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Manila Electric Company (Meralco) of the Philippines has said that it plans to borrow abroad in order to finance its capital expenditures, particularly its venture into power generation.

In a disclosure to the Philippine Stock Exchange, Meralco said that it has agreed with Citigroup to arrange a roadshow with investors in Singapore and Hong Kong. A spokesman for Meralco said: “After going on a roadshow to potential bond investors, and should market conditions become favourable thereafter, the company may consider a US Reg S transaction with the amount and tenor to be determined at the time.” A US Regulation S transaction refers to an overseas stock or bond sale by a company – whether or not based in the USA – that need not file the usual documents that the US Securities and Exchange Commission normally requires for selling such securities.

Standard and Poor’s Rating Services assigned a BB rating to Meralco’s proposed dollar-denominated borrowing. S&P; said: “The rating reflects the company’s dominant position in power distribution, improving cash flows supported by a forecast of robust sales, and a stable regulatory framework in the Philippines.”

Meralco has been looking to develop a power generation portfolio of 2700MW to complement its distribution business. This portfolio is intended to help temper its rates and secure its electricity supply. The company’s investments in power generation are expected to take up the bulk of its capital expenditures.