RAM Ratings is examining the rating impact on Sarawak Hidro Sdn Bhd’s (the Company) Sukuk Murabahah of up to RM5,540 million in Nominal Value (2016/2031)

Published on 14 Mar 2017.

RAM Ratings is examining the rating impact on Sarawak Hidro Sdn Bhd’s (the Company) Sukuk Murabahah of up to RM5,540 million in Nominal Value (2016/2031) (rated AAA/Stable) following the recent announcement by the Sarawak Chief Minister of the proposed acquisition of the Company, which owns the Bakun hydroelectric plant, by Sarawak Energy Berhad. 

The rating considers the Federal Government’s liquidity support commitment to top up any shortfall in the Company’s targeted finance service coverage ratio, which  is articulated in an irrevocable and unconditional letter of undertaking from the former, effective throughout the tenure of the sukuk. However, as Sarawak Energy intends to acquire the entire equity stake in the plant from the Minister of Finance (Incorporated) (MoF), the consent of the sukuk holders would have to be obtained, given that the transaction covenants require a minimum MoF shareholding of 51% throughout the tenure of the issue. As plans with regard to the sukuk can only be finalised upon completion of the proposed acquisition, RAM will reassess the rating when more details become available.

Sarawak Hidro is an independent power producer that owns and operates the 2,400-MW Bakun plant, under a power purchase agreement which runs up to 31 March 2043. 

Analytical contact
Adeline Poh
(603) 7628 1021
adeline@ram.com.my

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