RAM Ratings reaffirms AA1 ratings of Panglima's Serial Bonds

Published on 09 December 2011
RAM Ratings has reaffirmed the AA1 rating of Panglima Power Sdn Bhd’s (“Panglima” or “the Company”) RM830 million Redeemable Secured Serial Bonds (“Serial Bonds”), with a stable outlook. Panglima is an independent power producer (“IPP”) that owns and operates a 720-MW nominal-capacity, combined-cycle, gas-turbine power plant in Teluk Gong, Melaka.

The rating remains supported by Panglima’s strong business profile. In FYE 31 January 2011 (“FY Jan 2011”), the Company delivered a satisfactory operational performance, having met most of the operating parameters under its power purchase agreement (“PPA”) with Tenaga Nasional Berhad (“TNB”). Although Panglima was unable to claim full available capacity payments owing to 2 incidents of failure to despatch instructions, the shortfall was minimal and had no detrimental effect on the Company’s debt-servicing ability. Meanwhile, the plant’s heat rates had been kept below the PPA’s allowable levels, thus allowing Panglima to fully pass through its fuel costs to TNB.

The Company’s debt-servicing ability remained intact in FY Jan 2011, with a debt-service coverage ratio (“DSCR”) of 2.43 times (with cash balances, post-distribution). Looking ahead, Panglima is expected to register minimum and average DSCRs (with cash balances, post-distribution) of 1.60 times and 2.15 times, respectively, on principal repayment dates. RAM Ratings understands that the Company will retain sufficient cash to prioritise its debt-servicing obligations and potential maintenance expenditure throughout the tenure of the Serial Bonds.

Similar to other IPPs, however, Panglima remains exposed to regulatory and single-project risks.

Media contact
Jocelyn Chiang
(603) 7628 1124
jocelyn@ram.com.my