RAM Ratings Reaffirms AA3 Rating of Tanjung Bin Energy's Sukuk

Transcription

1. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications RAM​ ​Ratings​ ​Reaffirms​ ​AA3​ ​Rating​ ​of​ ​Tanjung​ ​Bin Energy's​ ​Sukuk 30​ ​August​ ​2017 RAM​ ​Ratings​ ​has​ ​reaffirmed​ ​the​ ​AA3/Stable​ ​rating​ ​of​ ​Tanjung​ ​Bin​ ​Energy​ ​Issuer​ ​Berhad's​ ​(TBE Issuer​ ​or​ ​the​ ​Company)​ ​RM3.29​ ​billion​ ​Sukuk​ ​Murabahah​ ​(2012/2032).​ ​The​ ​rating​ ​reflects​ ​TBE Issuer's​ ​continued​ ​strong​ ​debt-servicing​ ​ability,​ ​underlined​ ​by​ ​adequate​ ​cashflows notwithstanding​ ​the​ ​recent​ ​unsatisfactory​ ​performance​ ​of​ ​Tanjung​ ​Bin​ ​Energy​ ​Sdn​ ​Bhd​ ​(TBE)'s ultra-supercritical​ ​1,000-MW​ ​coal-fired​ ​power​ ​plant​ ​in​ ​Tanjung​ ​Bin,​ ​Johor​ ​(the​ ​Plant).​ ​The​ ​rating is​ ​also​ ​supported​ ​by​ ​the​ ​favourable​ ​terms​ ​of​ ​TBE's​ ​power-purchase​ ​agreement​ ​(PPA)​ ​with Tenaga​ ​Nasional​ ​Berhad​ ​(TNB). TBE's​ ​cash​ ​generation​ ​has​ ​been​ ​within​ ​RAM's​ ​expectations.​ ​This​ ​is​ ​despite​ ​the​ ​Plant's significant​ ​downtime​ ​as​ ​a​ ​result​ ​of​ ​defect​ ​rectification​ ​works​ ​and​ ​leaks​ ​discovered​ ​in​ ​the generator​ ​following​ ​these​ ​works.​ ​The​ ​Plant​ ​recorded​ ​a​ ​rolling​ ​365-day​ ​unscheduled​ ​outage​ ​rate of​ ​14.52%​ ​as​ ​at​ ​end-May​ ​2017,​ ​against​ ​the​ ​threshold​ ​of​ ​6%​ ​to​ ​qualify​ ​for​ ​full​ ​available​ ​capacity payments​ ​(ACPs).​ ​This​ ​led​ ​to​ ​an​ ​ACP​ ​reduction​ ​of​ ​RM67.69​ ​million​ ​in​ ​5M​ ​FY​ ​Dec​ ​2017,​ ​which was​ ​within​ ​RAM's​ ​earlier​ ​sensitivity​ ​threshold​ ​of​ ​RM134​ ​million​ ​for​ ​2017.​ ​Despite​ ​further​ ​ACP reductions​ ​under​ ​RAM's​ ​sensitised​ ​case,​ ​we​ ​expect​ ​the​ ​rating​ ​of​ ​the​ ​Sukuk​ ​to​ ​remain​ ​intact.​ ​All repair​ ​works​ ​have​ ​been​ ​completed​ ​and​ ​the​ ​Plant​ ​had​ ​subsequently​ ​operated​ ​smoothly,​ ​with​ ​no outage​ ​in​ ​June​ ​2017​ ​and​ ​a​ ​low​ ​monthly​ ​UOR​ ​of​ ​0.97%​ ​in​ ​July​ ​2017. A​ ​wholly​ ​owned​ ​subsidiary​ ​of​ ​TBE,​ ​TBE​ ​Issuer​ ​is​ ​the​ ​contractor​ ​tasked​ ​with​ ​developing, constructing​ ​and​ ​financing​ ​the​ ​Plant​ ​for​ ​TBE.​ ​TBE,​ ​which​ ​is​ ​fully​ ​owned​ ​by​ ​Malakoff​ ​Corporation Berhad​ ​(Malakoff),​ ​in​ ​turn​ ​has​ ​a​ ​25-year​ ​PPA​ ​with​ ​TNB​ ​to​ ​finance,​ ​construct​ ​and​ ​operate​ ​the Plant.​ ​TBE​ ​Issuer's​ ​financial​ ​commitments​ ​will​ ​be​ ​supported​ ​by​ ​back-to-back​ ​payments​ ​from TBE.​ ​As​ ​such,​ ​RAM​ ​recognises​ ​the​ ​strong​ ​credit​ ​link​ ​between​ ​these​ ​entities​ ​and​ ​views​ ​them​ ​in aggregate. On​ ​9​ ​June​ ​2017,​ ​TBE​ ​signed​ ​a​ ​contract​ ​for​ ​the​ ​construction​ ​of​ ​a​ ​new​ ​jetty,​ ​the​ ​progress​ ​of​ ​which stood​ ​at​ ​6.27%​ ​as​ ​at​ ​15​ ​July​ ​2017.​ ​Pending​ ​completion​ ​of​ ​the​ ​jetty,​ ​TBE​ ​will​ ​need​ ​to​ ​incur barging​ ​costs​ ​for​ ​coal​ ​delivery,​ ​which​ ​in​ ​2016​ ​were​ ​within​ ​RAM's​ ​expectation.​ ​The​ ​costs​ ​are however​ ​anticipated​ ​to​ ​rise​ ​given​ ​the​ ​slow​ ​approval​ ​process​ ​for​ ​the​ ​jetty's​ ​construction.​ ​A prolonged​ ​delay​ ​in​ ​the​ ​completion​ ​of​ ​the​ ​jetty​ ​would​ ​elevate​ ​barging​ ​costs​ ​and​ ​exert​ ​pressure​ ​on the​ ​rating​ ​of​ ​the​ ​Sukuk.​ ​''Our​ ​assessment​ ​shows​ ​that​ ​TBE​ ​Issuer​ ​will​ ​be​ ​able​ ​to​ ​withstand​ ​a 3-month​ ​delay​ ​in​ ​the​ ​completion​ ​of​ ​the​ ​jetty​ ​up​ ​to​ ​end-June​ ​2019,​ ​higher​ ​barging​ ​costs​ ​and​ ​cost overruns​ ​amounting​ ​to​ ​5%​ ​of​ ​the​ ​contract​ ​price​ ​which​ ​is​ ​to​ ​be​ ​borne​ ​by​ ​TBE,''​ ​highlights​ ​Chong Van​ ​Nee,​ ​RAM's​ ​Co-Head​ ​of​ ​Infrastructure​ ​&​ ​Utilities​ ​Ratings.
2. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications RAM​ ​expects​ ​TBE​ ​Issuer's​ ​credit​ ​metrics​ ​to​ ​stay​ ​strong,​ ​with​ ​its​ ​minimum​ ​finance​ ​service coverage​ ​ratio​ ​(with​ ​cash​ ​balances,​ ​post-distribution)​ ​projected​ ​to​ ​stand​ ​at​ ​1.52​ ​times​ ​for​ ​the remaining​ ​tenure​ ​of​ ​the​ ​Sukuk​ ​despite​ ​stress-test​ ​assumptions​ ​of​ ​higher​ ​unscheduled​ ​outage rates,​ ​barging​ ​costs,​ ​operational​ ​and​ ​capital​ ​expenditure.​ ​The​ ​rating​ ​also​ ​takes​ ​account​ ​of​ ​the Company's​ ​healthy​ ​liquidity​ ​profile​ ​which​ ​is​ ​buffered​ ​by​ ​standby​ ​letters​ ​of​ ​credit​ ​ ​expected​ ​to​ ​be renewed​ ​every​ ​6​ ​months​ ​ ​to​ ​ensure​ ​that​ ​the​ ​Project​ ​Company's​ ​Finance​ ​Service​ ​Reserve Account​ ​is​ ​fully​ ​funded. A​ ​bullet​ ​repayment​ ​of​ ​RM1.29​ ​billion​ ​under​ ​TBE​ ​Issuer's​ ​Junior​ ​Term​ ​Loan​ ​Facility​ ​has​ ​been successfully​ ​refinanced​ ​via​ ​a​ ​RM800​ ​million​ ​Sukuk​ ​Wakalah​ ​facility​ ​issued​ ​by​ ​TBE​ ​and​ ​a RM500​ ​million​ ​shareholder's​ ​loan​ ​extended​ ​by​ ​Malakoff​ ​on​ ​15​ ​March​ ​2017. Organisation​ ​Name: News​ ​Type: RAM​ ​Rating​ ​Services​ ​Berhad RATING​ ​ANNOUNCEMENT Source: BNM​ ​Announcements Media​ ​Contact Padthma​ ​Subbiah (603)​ ​7628​ ​1162 padthma@ram.com.my Disclaimer: The​ ​credit​ ​rating​ ​is​ ​not​ ​a​ ​recommendation​ ​to​ ​purchase,​ ​sell​ ​or​ ​hold​ ​a security,​ ​inasmuch​ ​as​ ​it​ ​does​ ​not​ ​comment​ ​on​ ​the​ ​security's​ ​market price​ ​or​ ​its​ ​suitability​ ​for​ ​a​ ​particular​ ​investor,​ ​nor​ ​does​ ​it​ ​involve​ ​any audit​ ​by​ ​RAM​ ​Ratings.​ ​The​ ​credit​ ​rating​ ​also​ ​does​ ​not​ ​reflect​ ​the legality​ ​and​ ​enforceability​ ​of​ ​financial​ ​obligations. RAM​ ​Ratings​ ​receives​ ​compensation​ ​for​ ​its​ ​rating​ ​services,​ ​normally paid​ ​by​ ​the​ ​issuers​ ​of​ ​such​ ​securities​ ​or​ ​the​ ​rated​ ​entity,​ ​and sometimes​ ​third​ ​parties​ ​participating​ ​in​ ​marketing​ ​the​ ​securities, insurers,​ ​guarantors,​ ​other​ ​obligors,​ ​underwriters,​ ​etc.​ ​The​ ​receipt​ ​of this​ ​compensation​ ​has​ ​no​ ​influence​ ​on​ ​RAM​ ​Ratings'​ ​credit​ ​opinions or​ ​other​ ​analytical​ ​processes.​ ​In​ ​all​ ​instances,​ ​RAM​ ​Ratings​ ​is committed​ ​to​ ​preserving​ ​the​ ​objectivity,​ ​integrity​ ​and​ ​independence​ ​of its​ ​ratings.​ ​Rating​ ​fees​ ​are​ ​communicated​ ​to​ ​clients​ ​prior​ ​to​ ​the issuance​ ​of​ ​rating​ ​opinions.​ ​While​ ​RAM​ ​Ratings​ ​reserves​ ​the​ ​right​ ​to disseminate​ ​the​ ​ratings,​ ​it​ ​receives​ ​no​ ​payment​ ​for​ ​doing​ ​so,​ ​except for​ ​subscriptions​ ​to​ ​its​ ​publications.
3. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications Similarly,​ ​the​ ​disclaimers​ ​above​ ​also​ ​apply​ ​to​ ​RAM​ ​Ratings' credit-related​ ​analysis​ ​and​ ​commentaries,​ ​where​ ​relevant.