Published on 30 Sep 2019.
RAM Ratings has assigned a final AA3/Stable rating to Cypark Ref Sdn Bhd’s (the Issuer) RM550 mil SRI Sukuk Murabahah Programme (2019/2040) (SRI Sukuk Murabahah). Cypark Ref, a wholly owned indirect subsidiary of Cypark Resources Berhad (CRB or the Sponsor), is the appointed turnkey contractor and special-purpose vehicle set up to raise financing for three 30 MWac solar photovoltaic (PV) projects, involving a ground-mounted and two floating solar farms.
The three solar PV projects are separately owned by Viva Solar Sdn Bhd, Cove Suria Sdn Bhd and Cypark Estuary Solar Sdn Bhd (collectively, the Project Companies). The Project Companies have each signed 21-year Power Purchase Agreements (PPAs) with Tenaga Nasional Berhad (TNB) for their respective solar PV projects, with a scheduled commercial operations date of 31 December 2020.
As the Issuer’s obligations under the SRI Sukuk Murabahah will be met by the respective turnkey contract payments due from the Project Companies, RAM’s analysis focuses on the underlying project fundamentals and the ability of these companies to meet their deferred turnkey payment obligations. We have adopted the weakest-link approach to determine the sukuk rating, as major failures at any of the Projects will lead to an eventual default on the SRI Sukuk Murabahah.
Since the preliminary rating was published on 7 August 2019, some revisions have been made to the transaction. These include: (1) a smaller sponsor’s equity commitment of RM151 mil (from the original RM169 mil), reflecting the reduced total project cost of RM701 mil (from the previous RM719 mil); (2) the inclusion of an irrevocable, unconditional and on-demand bank guarantee (RM80 mil) to back the Sponsor’s equity commitment, which will be made progressively during the construction period; and (3) changes to land-related security arrangements due to Malay Reserve Land requirements.
In assigning the final rating, RAM has reviewed all the relevant transaction documents and assumptions applied. We find them to be in line with our expectations when the preliminary rating had been assigned. Please refer to our final rating rationale on Cypark Ref for further details on the assigned rating.
Chu Jia Ying
(603) 3385 2519
(603) 3385 2577
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Ratings on Cypark REF Sdn Bhd