OREANDA-NEWS. S&P Global Ratings today lowered its rating on Philippine Power Trust I (Napocor)'s US$250 million certificates to 'AA (sf)' from 'AA+ (sf)'.

The certificates are backed by an unsecured guaranteed note issued by the National Power Corp. of the Philippines (Napocor) that benefits from an unconditional and irrevocable sovereign guarantee issued by the Republic of the Philippines (ROP). This guaranteed note forms the principal asset backing the issuance of the trust certificates and is the primary source for payments due to certificateholders. Certificateholders, in turn, benefit from additional credit enhancement in the form of an expropriation insurance policy (limited to nonpayment of sovereign guarantee obligations) provided by Overseas Private Investment Corp. (OPIC), which insures payment under the guaranteed note.

The rating on the Philippine Power Trust I (Napocor) certificates reflects our view of OPIC's credit profile, which we assess according to our government-related enterprise (GRE) methodology. This informs our view of OPIC's ability and willingness to make any payments that may be required under the terms of its expropriation insurance policy should there be a default on the payment of amounts due under the guaranteed note by both Napocor and the ROP.

Currently, the outstanding balance of the certificates is US$59,523,808 and these are expected to fully mature by Sept. 26, 2018. Napocor has made all principal and interest payments according to schedule, including OPIC's premium. Additionally, there have been no early amortization events, calls on the ROP guarantee, or claims under the OPIC policy. Finally, the transaction benefits from a special reserve account for any unexpected expense the trustee may incur (of US$175,000 – currently at $188,397). It has not been used since issuance.