RAM Ratings has reaffirmed the AA3/stable rating of Jati Cakerawala Sdn Bhd’s (the Company) RM540 million Sukuk Murabahah (2013/2023)

Published on 30 December 2013

RAM Ratings has reaffirmed the AA3/stable rating of Jati Cakerawala Sdn Bhd’s (the Company) RM540 million Sukuk Murabahah (2013/2023) (Sukuk). Jati is an investment-holding company that owns 80% of Teknologi Tenaga Perlis Consortium Sdn Bhd (TTPC) – an IPP that owns and operates a 650-MW combined-cycle, gas-turbine power plant in Kuala Sungai Baru, Perlis.
The rating reflects TTPC’s sturdy business profile, underscored by its commendable operational performance and strong terms of its Power Purchase Agreement (PPA) with Tenaga Nasional Berhad (TNB) – a strong counterparty whose debt security is rated AAA/stable by RAM.
The rating of the Sukuk has been notched down from that of TTPC’s RM835 million Sukuk Murabahah (2013/2023) (rated AA1/stable) due to its lower priority in terms of both cashflow waterfall and security. This is because the repayment of Jati’s Sukuk depends on TTPC’s dividends as its only source of cashflow. The 2-notch rating differential between Jati’s and TTPC’s sukuk issues reflects the former’s low level of subordination and projected minimum subordinated finance service coverage ratio (with cash balances, post-distribution) of 1.50 times throughout its tenure.
Our sensitised cashflow projections assume that both TTPC and Jati will pay optimum dividends to their respective shareholders on a forward-looking basis throughout the tenures of both sukuk (as opposed to only the year of assessment) when adhering to their financial covenants. We highlight that Jati is expected to be circumspect in its distributions – and this is consistent with the Company’s representation – as excessive distributions in any year may have a detrimental impact on its debt-servicing ability.

Media contact
Chin Wynn
(603) 7628 1170
chinwynn@ram.com.my