S&P Global Ratings assigned a ‘BBB+’ long-term issue rating to PLDT Inc.’s proposed issuance of US dollar-denominated senior unsecured notes.
“The issue rating is subject to our review of the final issuance documentation,” the credit rating agency said.
Proceeds are expected to refinance debt maturing in 2020 and 2021, prepay outstanding loans and partially finance capital expenditure.
PLDT did not provide any details on the proposed notes.
“We equalize the rating on PLDT’s proposed senior unsecured notes with the issuer credit rating on the company. This is because we do not view PLDT’s capital structure as having material structural or contractual subordination risks,” S&P said.
“At end-March this year, PLDT’s capital structure consists of P205.3 billion of debt [excluding lease obligations]. All debt is unsecured, and about 40 percent of debt is held at the subsidiaries’ level. This is below the 50-percent priority debt ratio threshold, over which we consider senior unsecured lenders at the parent level may be disadvantaged in the event of financial stress,” S&P said.
“In our view, PLDT has limited rating headroom at the ‘BBB+’ level. We expect the company’s capital expenditure to remain elevated over the next few years,” it said.
The company set a P60-billion plus capital expenditure this year, 25 percent lower than the original P83-billion capex due to COVID-19 pandemic.
PLDT’s capex this year will be used to improve network coverage and capacity to support higher mobile data traffic and last-mile connectivity for home broadband services.
S&P said there would be increased competition when third player Dito Telecommunity Corp. entered the duopolistic telecommunications market in the Philippines.
“Dito’s entry was postponed and is now slated for the first half of 2021,” the credit rating agency said.
