Published on 08 April 2015
RAM Ratings is of the view that TNB
Janamanjung Sdn Bhd’s (TNBJ) failure to commence commercial operations
of its new 1,000-MW super-critical coal-fired power plant on 31 March
2015 will have no rating impact on Manjung Island Energy Berhad’s
Islamic Securities Programme of up to RM5 billion. Nonetheless, TNBJ is
liable to pay Tenaga Nasional Berhad (TNB) liquidated damages (LDs) and
is expected to suffer losses in available capacity payments from TNB.
These are, however, anticipated to be adequately compensated by LDs
payable by the engineering, procurement and construction contractors as a
consequence of the delay. “What drives the Series 1 sukuk rating is
Manjung Island’s superior debt-servicing ability, supported by cashflow
from TNBJ’s existing 2,100-MW coal-fired power plant,” highlights Chong
Van Nee, Co-Head of RAM’s Infrastructure & Utilities Ratings.
The AAA/stable rating of Series 1 of Manjung Island’s
Securities Programme is premised on TNBJ’s exceptional debt-coverage
metrics, with a minimum Finance Service Coverage Ratio (with cash
balances, post-distribution and calculated on principal-repayment dates)
of 2 times under RAM’s sensitised cashflow analysis. The enhanced
AAA(s)/stable rating of Series 2 of the Programme reflects a corporate
guarantee from TNB.
Manjung Island is a special-purpose vehicle set up to
raise funds required for the development of TNBJ’s 1,000-MW plant.
Manjung Island will derive lease payments from TNBJ. In addition, the
securities holders’ recourse to TNBJ under the Ijarah structure of the
RM5 billion Programme is recognised in the Purchase Undertaking between
Manjung Island and TNBJ. In this regard, RAM considers the strong credit
link between these entities and views both companies in aggregate.
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