RAM Ratings reaffirms Sepangar's AA1 Issue Rating
RAM Ratings has reaffirmed the AA1/Stable rating of Sepangar Bay Power Corporation Sdn Bhd's (Sepangar or the Company) RM575 million nominal value Sukuk Murabahah (the Sukuk).
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- 7 /22/2016 Latest Announcement - (News ID : 2016072200016) Latest Announcement News ID : 2016072200016 Subject : Sepangar Bay Power Corporation Sdn Bhd Sepangar Bay Power Corporation Sdn Bhd Organisation Name: RAM RATING SERVICES BERHAD News Type: RATING ANNOUNCEMENT Reference Site: None Embargo Date: 22/07/2016 Embargo Time: 03:40 PM Expiry Date: 21/08/2016 Priority: Medium Summary: RAM Ratings reaffirms Sepangar's AA1 issue rating Attachments: No attachment available. Disclaimer: The user, including a user who is also a FAST Participant, expressly agrees that the use of this website which is accessible at https://fast.bnm.gov.my/ is at the user's sole risk. The information contained in this FAST website is compiled by MyClear Sdn. Bhd. (MyClear) and is provided on an "as is" basis without any representations or warranties of any kind, either expressed or implied. While MyClear makes every effort to ensure that information contained in the FAST website are accurate and disseminated in a timely and efficient manner, the user acknowledges that delays, errors, omissions or inaccuracies may occur. MyClear disclaims any liability pertaining to the consequences of any delays, errors, omissions or inaccuracies arising out of or relating to the FAST website or information, including but not limited to, any decision made or action taken by a user in reliance upon such information, or for damages suffered, whether direct, consequential, special, punitive, indirect or otherwise, notwithstanding having been advised of the possibility of such damages. In the event of any dispute, the official records of MyClear shall prevail. MyClear, Bank Negara Malaysia or any of its affiliates, officers, directors, agents or any other party involved in creating, producing or delivering the FAST website, shall not be liable for any direct, consequential, special, punitive, indirect, incidental or other damages arising out of or in any way connected with the use or inability to use the FAST website or information, whether based on contract, tort, liability or otherwise, even if advised on the possibility of any such damages. Content https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016072200016&mode=DISPLAY&info=NEWS&screenId=PB010400 1/2
- 7 /22/2016 Latest Announcement - (News ID : 2016072200016) RAM Ratings has reaffirmed the AA1/Stable rating of Sepangar Bay Power Corporation Sdn Bhd's (Sepangar or the Company) RM575 million nominal value Sukuk Murabahah (the Sukuk). The rating reflects Sepangar's robust cashflow generation to service debt obligations, backed by the favourable terms of the Company's Power Purchase Agreement (PPA) with its sole offtaker, Sabah Electricity Sdn Bhd (SESB). Save for a onetime damage to its steam turbine in January 2014, the Company has ensured the Plant resumed its optimal performance, demonstrated by its ability to maintain its 12month rolling Equivalent Availability Factor above the PPA's requirement. This has enabled the Company to claim full Capacity Payments since February 2015. Furthermore, Sepangar had managed to fully pass through fuel costs to SESB by operating within the heat rates stipulated in the PPA. As such, based on our projections, Sepangar is envisaged to preserve its strong cashflowgenerating ability, with an average annual prefinancing cashflow of about RM57 million throughout the tenure of the Sukuk. This translates into solid debt coverage, enabling the Company to maintain a finance service coverage ratio of at least 1.80 times (with cash balances, postdistribution and calculated on principal repayment dates) during this period. Furthermore, Sepangar's distributions are subject to stringent covenants, including a dividendpayment covenant of 1.80 times (with cash balances, postdistribution and calculated on principal repayment dates), annual distribution caps and the requirement that such payments should have no adverse rating impact on the Company. On this account, we have assumed that Sepangar will adhere to its financial covenants throughout the tenure of the Sukuk (i.e., on a forwardlooking basis, as opposed to only in the year of assessment). As with other independent power producers, the Company remains exposed to regulatory and singleproject risks. Media contact Nurhayati Sulaiman (603) 7628 1040 yati@ram.com.my 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. Similarly, the disclaimers above also apply to RAM Ratings' creditrelated analyses and commentaries, where relevant. Published by RAM Rating Services Berhad © Copyright 2016 by RAM Rating Services Berhad https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016072200016&mode=DISPLAY&info=NEWS&screenId=PB010400 2/2
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