Manila Water Company

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Manila Water Company’s ‘Aaa’ Rating Affirmed

Posted: Wednesday September 19, 2007

PhilRatings has affirmed its PRS ‘Aaa’ rating to Manila Water Company, Inc. A company rated PRS ‘Aaa’ has a VERY STRONG capacity to meet its financial commitments relative to that of other Philippine corporates. A PRS Aaa is the highest Corporate Credit Rating assigned on the PRS scale.

In assigning the rating, the following key strengths were considered: sound and sustainable contractual framework; proven track record of operating efficiency; sustained earnings generation anchored on a growing customer base; steady cash flows from operations providing adequate debt and interest coverage; wide access to funding to support capital expenditure program; and benefits from synergy with shareholders and progressive relationship with regulators.

The operating performance of Manila Water shows a very satisfactory compliance with all the Key Performance Indicators (KPIs) and Business Efficiency Measures (BEMs) by which the Regulatory Office of Metropolitan Waterworks and Sewerage System (MWSS) evaluates the performance of the company under the Concession Agreement. This assures that the Concession Agreement and the accompanying arrangements will continue in effect and undisturbed.

In turn, this very satisfactory compliance with KPIs and BEMs have translated to a strong financial performance measured by conventional standards of growth and stability of revenues, profits and cash flows, as well as a solid capital base matched with an appropriate long-term debt mix, all of which support the capital expenditure program.

It is this capital expenditure program – well-planned, well-sequenced and well-executed – which anchors the operating and financial performance that provides the returns on investment of the company under the Concession Agreement’s provisions.

PhilRatings will continue to monitor significant developments relating to the company, its operations, and financial performance. In particular, the outcome of the ongoing 2nd rate rebasing process, to be completed by end-2007, is being watched for any significant or material amendments to the regulatory prescriptions or regulatory environment.

Source: Philratings