S&P drops Bauang view to negative

Standard & Poor's said it revised the outlook on the BB- rating on Bauang Private Power Corp.'s $85 million senior secured notes due 2008 to negative from stable.

The outlook revision is in line with a similar outlook revision on the foreign currency rating of its offtaker, National Power Corp. (Napocor, foreign currency BB-/negative; local currency BB+/negative) as well as that on the sovereign rating of the Philippines (foreign currency BB-/negative/B; local currency BB+/negative/B).

The rating on Bauang's senior secured notes reflects the following factors: The credit quality of Bauang's existing electricity purchaser, state-owned Napocor, ultimately relies on the sovereign credit ratings on the Philippines and its stable revenue, as the fixed capital capacity fee payments to Bauang under the power purchase agreement with Napocor are in dollars and are more than sufficient to cover Bauang's debt-service payments, S&P said.

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