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

Published on 25 Jan 2017.

RAM Ratings has reaffirmed the A1/Stable rating of Special Power Vehicle Berhad’s (SPV or the Company) RM800 million Class A IMTN Facility (2005/2022) (Class A IMTN). The rating reflects the continued receipt of sturdy payments from Jimah Energy Ventures Sdn Bhd’s (JEV) RM895 million Junior Debt (Junior Debt). As SPV is purely an investment-holding company, it relies solely on residual cashflow from JEV – an independent power producer (IPP) that owns a 1,400-MW coal-fired power plant in Port Dickson, Negeri Sembilan. JEV’s cashflow profile, coupled with its strong business, had remained robust – as reflected in the AA3/Stable rating of the IPP’s RM4.85 billion Senior IMTN Facility. This is essential to SPV’s cashflow protection, which is highly dependent on JEV’s business profile and cashflow management.

The rating of SPV’s sukuk has been notched down from that of JEV’s due to the former’s lower priority in terms of both cashflow waterfall and security. Given that SPV’s sukuk exhibits more debt-like features, it is deemed to have a low level of subordination, which supports a narrower gap between its rating and that of JEV’s sukuk.

Our sensitised cashflow projections indicate that SPV’s minimum sub-finance service coverage ratio (with cash balances, post-distribution, calculated on payment dates) will come in at 1.29 times throughout the remaining tenure of the Class A IMTN. The ratio takes into account distributions to holders of SPV’s RM215 million Class B IMTN (Class B IMTN), with JEV adhering to its financial covenants throughout the tenures of both its and SPV’s sukuk (i.e., on a forward-looking basis, as opposed to only in the year of assessment).

The Company’s debt-servicing ability in respect of the Class A IMTN will be impaired in the event of a failure on JEV’s part to fulfil its Junior Debt obligations in full and in a timely manner due to greater-than-expected deterioration of its operating performance, and higher-than-anticipated capex and distributions to the IPP’s shareholders. Class B IMTN distributions by SPV that exceed our projections throughout the remaining tenure of the Class A IMTN will also be a drawback in this regard.

Analytical contact

Adeline Poh

(603) 7628 1021

adeline@ram.com.my

Media contact

Padthma Subbiah

(603) 7628 1162

padthma@ram.com.my