Independent power producer Tanjung Bin Power Sdn Bhd has proposed a Sukuk Ijarah programme of up to RM4.5bil in nominal value (2012/2029).
RAM Rating Services Bhd said on Tuesday it had assigned a preliminary AA2 long-term rating to the proposed programme while the long-term rating had a stable outlook.
Tanjung Bin Power was granted the right to build, own and operate a 2,100MW coal-fired power plant in Tanjung Bin, Johor, for 25 years under a power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB). The PPA expires on Sept 27, 2031.
“Proceeds from the Sukuk Ijarah will mainly be utilised to refinance the outstanding RM3.53bil under the company's existing RM5.57bil Istisna' medium-term notes programme (2003/2018) and for working capital purposes, and/or to provide payment/advance to its shareholder(s),” said the ratings agency.
RAM Ratings said the preliminary rating reflected Tanjung Bin Power's robust debt-coverage levels; its minimum finance service coverage ratio was expected to be 1.66 times, which was in line with an AA2 rating.
It said the preliminary rating was also supported by Tanjung Bin Power's strong business profile, underscored by the favourable terms of its PPA with TNB.
“We derive further comfort from the sturdy credit profile of TNB, whose debt facility carries an AAA rating, with a stable outlook,” it said.
However, RAM Ratings said the plant had been increasingly experiencing operational hiccups since 2010.
In fiscal 2011, its total unscheduled outage hours resulted in an unscheduled outage rate (UOR) that exceeded the PPA limit of 6%, resulting in availability capacity payments (ACPs) losses; in any case, the ACPs losses have been fully recovered though reimbursement from TNB for unutilised scheduled outage hours.
“We note that the Plant's UOR had eased below 6% as at end-February 2012. In any case, our sensitised cashflow analysis assumes ACP losses due to operational hiccups throughout the tenure of the Sukuk Ijarah.
“In the meantime, and similar to all other IPPs, Tanjung Bin Power remains exposed to regulatory and single-project risks,” it said.
