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RAM Ratings Reaffirms Sepangar's AA1 Issue Rating

IM Press Release
By IM Press Release
5 years ago
RAM Ratings Reaffirms Sepangar's AA1 Issue Rating

Islam, Sukuk

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  1. IB Press Release Service Published on :​ ​IslamicBanker.com Publications: ​https://www.islamicmarkets.com/publications RAM Ratings Reaffirms Sepangar's AA1 Issue Rating 9 August 2017 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 off-taker, Sabah Electricity Sdn Bhd (SESB). During the review period, Sepangar's plant maintained its 12-month rolling Equivalent Availability Factor above the required 87%, which has enabled the Company to claim full Capacity Payments since February 2015. Furthermore, the Company had fully passed through its fuel costs to SESB. Based on our projections, Sepangar is envisaged to preserve its strong cash-flow generating ability, with an average annual pre-financing cashflow of about RM51 million throughout the tenure of the Sukuk. This translates into solid debt coverage, allowing the Company to maintain minimum and average finance service coverage ratios (with cash balances, post-distribution and calculated on principal repayment dates) of 1.80 times and 2.13 times, respectively, throughout the Sukuk's tenure. Furthermore, Sepangar's distributions are subject to stringent covenants, including a dividend payment covenant of 1.80 times (with cash balances, post-distribution 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 (as opposed to only in the year of assessment). As with other independent power producers, the Company remains exposed to regulatory and single-project risks. Organisation Name: News Type: RAM Rating Services Berhad RATING ANNOUNCEMENT
  2. IB Press Release Service Published on :​ ​IslamicBanker.com Publications: ​https://www.islamicmarkets.com/publications 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. Similarly, the disclaimers above also apply to RAM Ratings' credit-related analysis and commentaries, where relevant.