Moody’s Ratings affirmed Power Sector Assets and Liabilities Management Corporation’s Baa2 issuer rating and backed senior unsecured bond ratings, maintaining a stable outlook in line with the Philippines’ sovereign credit assessment.
The rating reflects PSALM’s strategic importance as a state-owned enterprise with a mandated policy role in the Philippine power sector, along with the Government of the Philippines’ firm commitment to support the company. Moody’s assessed a very high likelihood that the government would support the company to prevent default during periods of stress.
The rating agency said PSALM’s financial and operational ties to the government are so close that its credit profile cannot be separated from the government’s. It assigned the rating without a baseline credit assessment because the company relies solely on government support.
PSALM was established in 2001 under the Electric Power Industry Reform Act to restructure the Philippines’ power sector. Its continuing policy role includes privatizing remaining generation assets, real estate, and independent power producer contracts transferred from the National Power Corporation, while liquidating liabilities assumed from NPC.
The government has extended the corporate life of the Power Sector Assets and Liabilities Management Corporation (PSALM) by 10 years, making the new expiration date June 2036. Republic Act No. 12179, signed in April 2025, authorizes this extension. The extension provides PSALM with additional time to fulfill its privatization mandate. According to the law, the government is responsible for assuming any remaining assets and liabilities at the end of PSALM’s corporate life.
Government funding significantly influences PSALM’s financial position and liquidity. The company relies on allocations from the Malampaya Fund under the Murang Kuryente Act, which allows up to PHP 208 billion in allocations through annual budgetary approvals. However, PSALM received PHP 40 billion over the past five years, below expected levels, prompting it to rely on additional government-guaranteed debt to meet funding requirements.
