S&P Global Ratings has revised the credit outlook for Manila Electric Co. (Meralco) from stable to positive, while maintaining its ‘BBB’ credit rating. The change reflects Meralco’s improving market position and increased involvement in power generation. In April 2025, Meralco secured a 25-year renewal of its power distribution franchise, extending it to 2053. This ensures the company’s continued operations in Metropolitan Manila and surrounding areas, which account for about half of the Philippines’ economic activity.
Meralco has also made strategic investments to expand its role beyond power distribution. Earlier this year, the company acquired a 60% stake in Chromite Gas Holdings Inc., which holds a majority interest in two operational natural gas power plants with a combined capacity of 2.6 gigawatts. In addition, Meralco is developing a large-scale solar energy project through a joint venture with Actis. The Terra solar project is expected to add 3.5 gigawatts of capacity by 2027, with the first 2.5 gigawatts set to begin operations in 2026 and the remaining 1.0 gigawatt the following year.
These developments are projected to significantly boost Meralco’s earnings. S&P estimates that the Terra solar project and Chromite Gas Holdings will account for around 31% of Meralco’s adjusted EBITDA by 2027. Profit margins are also expected to improve, with EBITDA margins rising from 16% in 2024 to between 21% and 22% by 2027. The solar projects alone are expected to generate margins exceeding 80%.
Even with higher spending, Meralco’s finances are expected to remain solid. The company plans to spend PHP 212 billion in 2025 and PHP 91 billion in 2026, up from PHP 41 billion in 2024. Despite this increase, S&P believes Meralco will keep its funds from operations to debt ratio between 29% and 33%, indicating manageable debt levels.
S\&P may raise Meralco’s credit rating if the company successfully executes its projects, maintains financial discipline, and continues earning reliable returns from its regulated operations. On the other hand, the outlook could return to stability if Meralco takes on too much debt, makes aggressive acquisitions, or faces regulatory challenges that weaken its financial standing.