MNTC retains top credit rating for P2.3-B notes

MANILA, Philippines - Manila North Tollways Corp. (MNTC) has retained its PRS Aaa rating - the highest rating assigned by the Philippine Rating Services Corp. – for its outstanding P2.3-billion fixed-rate corporate notes.

PhilRatings pointed out that obligations rated ‘PRS Aaa’ are of the highest quality with minimal credit risk, as the issuer’s capacity to meet its financial commitment on the obligation is extremely strong.

MNTC, a member of the Metro Pacific Group of Companies, is the concessionaire for the North Luzon Expressway (NLEX).

When first issued, the notes had a total amount of P5.5 billion. Although 94 percent of the principal is still due on November 2013, MNTC chose to prepay a significant portion of the notes in the early part of 2011 to take advantage of the low interest rate regime, extend loan maturities and rationalize its loan covenants in preparation for its expansion projects. Only P2.3 billion of the notes remain outstanding.

In maintaining the rating, PhilRatings took into account the resilient demand for MNTC’s tollway services, the company’s strong cash flow generation and its improved core income.

“Demand for MNTC’s tollway service has remained resilient amidst factors such as the recurring hikes in fuel prices and increased toll rates. In fact, average daily traffic went up by 6.3 percent to 159,862 vehicle-entries in 2010, notwithstanding the increase in fuel prices by an average of 25 percent year-on-year,” PhilRatings said.

Traffic volume was relatively stable despite the 11.8-percent toll hike and continued surge in fuel prices. Contributing to volume growth were the acceleration of traffic in the Subic-Clark-Tarlac Expressway (SCTEX), the influx of tourists during the summer season which was supported by MNTC’s intensive tourism promotion programs, MNTC’s continuous efforts to improve and enhance the NLEX and the opening of a new segment called Mindanao Avenue Link.

This new segment complements the Balintawak Toll Barrier by providing a new and faster access to NLEX via Mindanao Avenue in Quezon City. As of June this year, open system traffic rose three percent year-on-year due partly to the opening of the Mindanao Avenue Link.