RAM Ratings has reaffirmed the A1/Negative/- rating of Special Power Vehicle Berhad’s (SPV or the Company) RM800 million Class A Islamic MTN Facility (2005/2022).

Published on 07 October 2013

RAM Ratings has reaffirmed the A1/Negative/- rating of Special Power Vehicle Berhad’s (SPV or the Company) RM800 million Class A Islamic MTN Facility (2005/2022). SPV is a special-purpose vehicle set up as a funding conduit to part-finance the development of Jimah Energy Ventures Sdn Bhd’s (JEV) 1,400-MW coal-fired power plant in Port Dickson, Negeri Sembilan.
SPV’s financial indicators were within RAM’s expectations during the period under review as JEV had been circumspect in its cashflow management. Nevertheless, we have maintained the negative outlook on the Class A IMTN’s rating due to our lingering concerns about the instrument’s expected weaker debt coverage. In FY Dec 2011, SPV incurred higher profit payments on its RM215 million Class B IMTN while JEV bore heftier capex, thereby substantially weakening the future cashflow accumulation of both entities vis-a-vis our expectations. Given this, SPV’s debt-coverage levels are projected to deteriorate, especially towards the final maturity of the Class A IMTN.
Looking ahead, SPV is expected to continue making profit payments on the Class B IMTN, to the extent that the Company can just meet its last payment obligation on the Class A IMTN (8 years later). As such, the rating is likely to move downwards gradually in view of the steadily deteriorating cash buffers. Should SPV’s financial indicators deteriorate beyond our projections, either due to higher-than-projected profit payments on the Class B IMTN or lower-than-expected future cashflow contribution from JEV throughout the remaining tenure of the Class A IMTN, the rating will be subject to additional downward pressure. .
JEV had issued 2 debt programmes – the RM4.85 billion Senior Islamic MTN Facility (2005/2025) (rated AA3/Stable/- by RAM) and the unrated RM895 million Junior Debt (2005/2034) - to finance the plant. The latter is fully subscribed for by SPV and subordinated to the Senior IMTN

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