Published on 22 July 2016
RAM Ratings
has reaffirmed the AA1/Stable rating of Sepangar Bay Power Corporation Sdn
Bhd’s (Sepangar or the Company) RM575 million nominal value Sukuk Murabahah (the
Sukuk). The rating reflects Sepangar’s robust cashflow-generation to service
debt obligations, backed by the favourable terms of the Company’s Power
Purchase Agreement (PPA) with its sole offtaker, Sabah Electricity Sdn Bhd
(SESB).
Save for a
one-time damage to its steam turbine in January 2014, the Company has ensured
the Plant resumed its optimal performance, demonstrated by its ability to
maintain its 12-month rolling Equivalent Availability Factor above the PPA’s
requirement. This has enabled the Company to claim full Capacity Payments since
February 2015. Furthermore, Sepangar had managed to fully pass through fuel
costs to SESB by operating within the heat rates stipulated in the PPA.
As such,
based on our projections, Sepangar is envisaged to preserve its strong
cashflow-generating ability, with an average annual pre-financing cashflow of
about RM57 million throughout the tenure of the Sukuk. This translates into
solid debt coverage, enabling the Company to maintain a finance service
coverage ratio of at least 1.80 times (with cash balances, post-distribution
and calculated on principal repayment dates) during this period.
Furthermore,
Sepangar’s distributions are subject to stringent covenants, including a
dividend-payment covenant of 1.80 times (with cash balances, post-distribution
and calculated on principal repayment dates), annual distribution caps and the
requirement that such payments should have no adverse rating impact on the
Company. On this account, we have assumed that Sepangar will adhere to its
financial covenants throughout the tenure of the Sukuk (i.e., on a
forward-looking basis, as opposed to only in the year of assessment). As with
other independent power producers, the Company remains exposed to regulatory and
single-project risks.
Media contact
Nurhayati Sulaiman
(603) 7628 1040
Nurhayati Sulaiman
(603) 7628 1040
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.