NLEX Corp. has maintained the highest credit rating given by a local debt watcher for its outstanding issuance worth P13 billion.
Philippine Ratings Services Corp. (PhilRatings) said in a statement yesterday it has again given NLEX Corp. a credit rating of “PRS Aaa” for its outstanding fixed-rate bonds.
The PRS Aaa rating is the highest PhilRatings gives to obligations that it believes have minimal risks. It means the issuer is perceived to have an “extremely strong” capacity to meet its financial commitments.
The rating given to NLEX Corp. was also given a stable outlook, which means the debt watcher expects it will not change in the next 12 months.
PhilRatings said to give the rating, it considered NLEX Corp.’s strong cash flow, conservative capital structure supported by retained earnings, well-managed toll franchise and resilient demand from the public for its services. But it also said political pressures that may cause further delays in the adjustments of its toll rates were accounted for.
“Traffic volume has consistently increased year-on-year, fueling the company’s revenues… This sustained profitability has translated to healthy cash flows and a robust equity base,” the debt watcher said.
It noted NLEX Corp.’s total revenues as of end-September 2019 stood at P11.2 billion, up 15% from in the same period in 2018. It added the company’s cash flow debt coverage ratio was “more than adequate” at 8.73x.
“The company has maintained a relatively conservative level of debt to finance its operations. Debt to equity ratio stood at 1.11x while its capitalization ratio was at 52.69% at the end of September 2019. These are seen to remain stable or even improve as NLEX Corp. continues to strengthen its equity position through retained earnings,” PhilRatings said.
NLEX Corp. currently operates the North Luzon Expressway and the Subic-Clark-Tarlac Expressway under concession agreements with the government, which supposedly guarantee periodic toll adjustments for the company. However, government approval on the increases are still pending.
But PhilRatings said despite this, NLEX Corp. is able to record a net income of P4.6 billion in the first nine months of 2019, growing 8% year-on-year. “(The company) has efficiently operated its concessions and completed expansion projects with the increase in traffic volume as its main revenue driver,” it said.
NLEX Corp. is under Metro Pacific Investments Corp., one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in BusinessWorld through the Philippine Star Group. — Denise A. Valdez
