CreditSights keeps ‘market perform’ rating on SMGP

SAN MIGUEL Global Power Holdings Corp. (SMGP) has retained a “market perform” rating from CreditSights, indicating that its bonds are expected to perform in line with the broader market, as the research firm cited improving operations but flagged lingering macroeconomic and financial risks.

In its latest analysis released on Tuesday, CreditSights said SMGP’s bond trading spreads are fairly valued relative to its peers, while noting improvements in its operations despite several lingering risks.

“We continue to take comfort in [SMGP’s] operations in the defensive Philippine power sector and improving credit outlook supported by capacity additions and new contract tie-ups,” CreditSights said in a report authored by Jonathan Tan Jun Jie and Lakshmanan R.

SMGP’s revenues declined by 23% in 2025, but its earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 9%, driven by contributions from new projects and contracts, as well as lower thermal costs. These gains helped offset weaker volumes at the Sual and Limay coal plants.

CreditSights noted the contribution of recently commissioned projects, including the 600-megawatt Mariveles coal plant in Bataan, as well as completed battery energy storage projects.

The company has also secured power contracts for its coal-fired plants in Mariveles, Bataan, and Masinloc, Zambales, as well as for its San Roque hydroelectric power plant in Pangasinan.

The research firm said input costs for thermal coal may remain elevated for longer due to disruptions in Qatari liquefied natural gas exports, a key substitute for coal in Asian markets. However, SMGP’s exposure is expected to be limited, with at least 75% of its power contracts allowing the full pass-through of higher input costs.

“Despite a few positives, we do not assign an outperform, as [SMGP] has weathered a very tight liquidity position not so long ago, its unrated perps are high-beta, and are exposed to broader market sell-offs if risk sentiment sours amid the raging Middle East conflict,” the report said.

CreditSights added that SMGP remains highly exposed to risks from peso depreciation, as its revenues are denominated in pesos while its capital expenditure and debt are largely in dollars. 

SMGP is among the largest power companies in the Philippines, with a diversified portfolio spanning natural gas, coal, and renewable energy, including hydroelectric power and battery energy storage systems. It is also engaged in retail electricity and distribution services. — Sheldeen Joy Talavera