Published on 10 May 2021.
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.
Yip Chee Meng
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