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RAM Ratings reaffirms A1/Stable rating of Jati Cakerawala’s sukuk

Published on 19 Dec 2019.

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RAM Ratings has reaffirmed the A1/Stable rating of Jati Cakerawala Sdn Bhd’s (Jati or the Company) RM540 mil Sukuk Murabahah (2013/2023). Purely an investment-holding company, Jati’s sole source of cashflow – dividend distributions from Teknologi Tenaga Perlis Consortium Sdn Bhd (TTPC) – has remained steady given the latter’s robust operational metrics and cash-generating aptitude. TTPC is an independent power producer that owns and operates a 650 MW combined-cycle, gas-turbine power plant in Perlis.

The rating of Jati’s Sukuk Murabahah is three notches lower from the AA1/Stable rating of TTPC’s sukuk, premised on the lower priority on Jati’s debt facility in terms of both cashflow waterfall and security relative to TTPC’s. The three-notch rating differential reflects the low level of subordination of Jati’s Sukuk Murabahah and the Company’s adequate debt coverage throughout its remaining tenure. 

TTPC has been outperforming our expectations, leading to improvements in Jati’s cashflow. Jati’s subordinated finance service ratio stood at 1.52 times (with cash balances, post-distribution) on 31 July 2019, surpassing our earlier projection of 1.44 times. Based on the Company’s intention of maximising dividend payments so long as its distribution covenant permits, we expect this ratio to reach a minimum of 1.40 times throughout the remaining tenure of the Sukuk Murabahah – a level that is commensurate with an A1 rating.  

 

Analytical contact
Irfan Afifah Mohd Zaki
(603) 3385 2551
irfan@ram.com.my

Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my

 

The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2019 by RAM Rating Services Berhad



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