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RAM Ratings reaffirms AA1/Stable rating of Teknologi Tenaga Perlis Consortium’s sukuk

Published on 19 Dec 2019.

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RAM Ratings has reaffirmed the AA1/Stable rating of Teknologi Tenaga Perlis Consortium Sdn Bhd’s (TTPC or the Company) RM835 mil Sukuk Murabahah (2013/2023). The rating reflects TTPC’s sturdy business profile, which is underpinned by the favourable terms of its power purchase agreement (PPA) with sole off-taker Tenaga Nasional Berhad (TNB), the steady operating track record of the Company’s plant and its robust debt-servicing ability. TTPC owns and operates a 650 MW combined-cycle, gas-turbine power plant in Kuala Sungai Baru, Perlis (the Plant), under a 21-year PPA with TNB, which will expire on 31 March 2024.  

We derive further comfort from the strong credit profile of TNB, which is rated AAA/Stable by RAM. As with other independent power producers, TTPC’s issue rating is moderated by inherent regulatory and single-project risks. 

We note that TTPC has been able to earn full available capacity payments and has been operating within the PPA’s unscheduled outage rate limit of 6% since the Plant’s commissioning. Additionally, the Company has been able to consistently and fully pass through its fuel costs to TNB, underscored by the Plant’s efficiency. 

Based on RAM’s sensitised analysis, TTPC is anticipated to generate an average annual pre-financing cashflow of about RM217 mil throughout the remaining tenure of the Sukuk. This translates into a strong minimum finance service coverage ratio of 1.80 times (with cash balances, post-distribution). Our cashflow analysis assumes that TTPC will pay optimum dividends while adhering to its financial covenants throughout the Sukuk’s tenure on a forward-looking basis, as opposed to only in the year of assessment. 

Meanwhile, Jati Cakerawala Sdn Bhd – TTPC’s major shareholder – relies on distributions from the Company to meet its financial obligations under the former’s RM540 mil Sukuk Murabahah (2013/2023), rated A1/Stable by RAM. 

 

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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