RAM Ratings reaffirms AA1 rating of Ranhill Powertron's Islamic MTN programme

Published on 04 October 2011
RAM Ratings has reaffirmed the AA1 rating of Ranhill Powertron Sdn Bhd’s (“Ranhill Powertron” or “the Company”) RM540 million Islamic Medium-Term Notes Programme, with a stable outlook. Ranhill Powertron is an independent power producer (“IPP”) that operates a 190-MW combined-cycle, gas-turbine power plant in Kota Kinabalu, Sabah, under a 21-year power purchase agreement (“PPA”) with Sabah Electricity Sdn Bhd (“SESB”).

Ranhill Powertron has managed to preserve its commendable operating track record, healthy financial profile and strong debt-servicing ability on the back of stringent financial covenants. The Company has been claiming full capacity payments from SESB since the commissioning of the original open-cycle, gas-turbine phase in 1998, by having consistently met the requirements under the PPA. It also earned a modest fuel margin in the 12-month period between July 2010 and July 2011, despite having registered higher-than-allowed heat-rate levels for 3 months.

Going forward, Ranhill Powertron is envisaged to generate respective minimum and average finance service coverage ratios (“FSCRs”) (with cash balances, post-distribution) of 1.79 times and 1.94 times on principal repayment dates. In assessing the Company’s ongoing annual distributions to its shareholders, our assumptions are in line with the management’s assertion that Ranhill Powertron will adhere to its financial covenants throughout the debt programme’s tenure (i.e. on a forward-looking basis, as opposed to only the year of assessment). Meanwhile, similar to other IPPs, Ranhill Powertron is also exposed to regulatory and single-project risks.

Media contact
Lawrence Leong
(603) 7628 1187
lawrence@ram.com.my