RAM Ratings has reaffirmed the AA2/Stable rating of Tanjung Bin Power Sdn Bhd’s (TBP or the Company) Sukuk Ijarah Programme of up to RM4.5 billion in nominal value (2012/2029) (the Sukuk).

Published on 15 June 2016

RAM Ratings has reaffirmed the AA2/Stable rating of Tanjung Bin Power Sdn Bhd’s (TBP or the Company) Sukuk Ijarah Programme of up to RM4.5 billion in nominal value (2012/2029) (the Sukuk). The rating continues to reflect TBP's strong debt-coverage levels owing to robust cashflow generation and a well-matched debt-repayment profile. The rating is also supported by the Company’s strong business profile, backed by the favourable terms of its Power Purchase Agreement (PPA) with Tenaga Nasional Berhad (TNB), its sole off-taker. As with other independent power producers (IPPs), TBP remains exposed to regulatory and single-project risks.

Following the progressive completion of the second phase of the power plant’s turnaround programme from July 2015 to February 2016, TBP had witnessed a notable operational improvement and claimed full available capacity payments (ACPs) and daily utilisation payments (DUPs) in fiscal 2015. In addition, the Company managed to fully pass through its fuel cost to TNB.

Looking ahead, TBP’s credit metrics are expected to stay solid, with its minimum finance service coverage ratio (FSCR) standing at 1.65 times for the remaining tenure of the Sukuk despite stress test assumptions of ACP and DUP losses in certain years. In our assessment of its distribution policy, the Company had represented to pay its subordinated debt obligations and dividends, subject to meeting financial covenants under the Sukuk on a forward-looking basis, as opposed to only in the year of assessment.

TBP is an IPP that has been granted the right to construct, own and operate a 2,100-MW coal-fired power plant in Tanjung Bin, Johor, under a PPA with TNB which expires on 27 September 2031.

Media contact
Wang Wai Wah
(603) 7628 1110
waiwah@ram.com.my