MY Power Bonds Roundup - Steady as usual

·         Since our review last year, IPPs’ financial metrics largely remained steady as expected given the cash flow stability.

·         Manjung (AAA) is still our preferred credit as it continues to exhibit the strongest credit profile which include projected DSCRs of at least 2x and 4.4x on average, gearing of less than 1x and good operating performance.

·         We continue to like Kimanis (AA-) on rating/outlook upgrade potential, although this is very much subject to post-completion operating and financial performance, therefore we will review and update our view on this once the full-year operating statistics for 2015 becomes available.

·         We remain comfortable with TNB related credit such as wholly-owned Manjung, TNB Northern (AAA) and TNB Western (AAA). Kapar (AA+) and Jimah East Power (JEP, AA-) share similar parental support strength given TNB’s 60% and 70% stake in the respective IPP. In the AA1/AA+ space, we like Sepangar and TTPC for their robust operating performance which underpins steady cash flow generation, and in AA2/AA space it is Tanjung Bin Power as its stronger financial metrics suggests better credit quality than peers in the same rating band. Moving down the credit curve, we prefer JEP and TBEI (AA3) over JEV (AA3) as its high leverage continues to be an overhang.

·         Credit Outlook: Besides Kimanis which we have a positive outlook, we keep a stable outlook on the other power names in this assessment.