RAM Ratings assigns final AA3 rating to reNIKOLA Solar’s ASEAN Green SRI Sukuk

Published on 10 May 2021.

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RAM Ratings has assigned a final AA3/Stable rating to reNIKOLA Solar Sdn Bhd’s (reNIKOLA Solar) RM390 mil ASEAN Green SRI Sukuk Programme (2021/2038). In doing so, we have reviewed all the relevant transaction documents and assumptions applied. We find them to be in line with our expectations when the preliminary rating was assigned (published on 27 November 2020). Please refer to our final rating rationale on reNIKOLA Solar for further details on the assigned rating.

reNIKOLA Solar had been set up to raise funds to refinance and manage three solar photovoltaic projects (the Plants) in Arau, Perlis; Gebeng, Pahang and Pekan, Pahang respectively with a total installed capacity of 63.9 MWac. The Arau and Gebeng plants are already operational. The Pekan plant is undergoing final testing and is expected to begin commercial operations by end-May 2021.

The rating reflects the Plants’ sound project fundamentals, underscored by the favourable terms of their 21-year Power Purchase Agreements with national utility giant, Tenaga Nasional Berhad (TNB). TNB (AAA-rated) is obligated to purchase energy generated by the Plants up to a specified limit, thereby moderating the absence of fixed availability-based revenue. Energy output from both the operating plants has been healthy. As such, reNIKOLA Solar’s projected debt coverage is deemed strong, anchored by predictable cashflow. 

The abovementioned strengths are, however, softened by a somewhat complicated transaction structure that involves a change of ownership and control via redeemable preference shares and multiple agreements. Other moderating factors include uncertain solar irradiance forecasts and exposure to inherent regulatory risk.

Analytical contact
Yip Chee Meng
(603) 3385 2516

Media contact
Padthma Subbiah
(603) 3385 2577

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
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Rating Rationale

Ratings on reNIKOLA Solar Sdn Bhd