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 21 Jul 2017.

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 robust debt-coverage levels owing to strong 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.

During the review period, TBP had seen a slight deterioration in its operating performance, mainly due to boiler tube leaks. Even so, the Company claimed full available capacity payments (ACPs) and incurred only a minimal loss in daily utilisation payments (DUPs), which was fully offset by bonus payments. Additionally, the Company had fully passed through its fuel costs to TNB. 

Moving forward, TBP’s credit metrics are expected to stay solid, with its minimum finance service coverage ratio (FSCR) (with cash balances, post-distribution and calculated on repayment dates) 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 that it would pay its subordinated debt obligations and dividends, subject to meeting financial covenants under the Sukuk throughout the Sukuk’s tenure, 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.

Analytical contact
Ong Ju Laine
(603) 7628 1183
julaine@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my