risk and that Meralco take a higher share of commercial risk. Meralco currently was required
to make an almost full capacity payment even when the power plant was unavailable.
Lessons learned
For the Quezon Power sub-investment-grade project bonds, up-front, full SEC registration
broadened distribution and helped to create the impression of a mainstream, liquid, corporate
type of deal.
(^1) This case study is based on the prospectus for the project bonds, articles in the financial press and an interview with
Barry P. Gold, Managing Director, Salomon Smith Barney.
(^2) Reyes, Rocky L., ‘Power Industry Reform in the Philippines’, IFLR Guide to Energy and Power,Euromoney
Institutional Investor, 2001, p. 69.
(^3) Ibid., p. 72.
(^4) Goldstein, Jeffrey E., and Michael B. Selvin, ‘Wider Environment’, Project Finance,February 2001, p. 46.
(^5) Ibid.
POWER PLANT