MOODY’S Investors Service has maintained its “stable” power sector outlook for eight Asian countries, including the Philippines.
“Moody’s outlook is stable for the eight power sectors of China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore and Thailand, in turn, driving Moody’s stable outlook for the broader Asian power sector,” it said in a report.
The stable outlook was supported by steady cash flows, gradual pace of regulatory changes, a gradual transition to a low-carbon economy and sufficient mitigants against capital-market volatility.
“We expect most rated power companies will report stable operating cash flow over the next 12 to 18 months, helped by stable or increasing dispatch volumes or timely cost pass-throughs, amid a gradual pace of regulatory changes, thus supporting their credit quality,” said Mic Kang, Moody’s vice president and senior credit officer.
However, Kang said, regulatory challenges are adversely affecting the credit metrics of Korean and Japanese companies because of prolonged delays in cost pass-throughs in Korea, and growing competition amid market deregulation in Japan.
This was contained in its just-released report on Moody’s outlook for the Asian power sector, titled “Power—Asia: 2019 outlook stable, with steady cash flow offset by regulatory challenges.”
The report also said that growing power demand or timely cost pass-throughs will also mitigate the strain on cash flows from higher generation costs and higher capital spending for most rated power companies in Asia.