• PRESS RELEASES

RAM Ratings reaffirms Mukah Power’s AA1(s) sukuk rating

Published on 30 Nov 2021.

Share Tweet Email

RAM Ratings has reaffirmed the enhanced AA1(s)/Stable rating of Mukah Power Generation Sdn Bhd’s (MPG or the Company) RM665 mil Senior Sukuk Mudharabah Programme (2006/2021). 

The rating reflects Sarawak Energy Berhad’s (SEB or the Group) strong support for MPG, which the Group owns via 100%-held subsidiary, SEB Power Sdn Bhd. MPG is a power producer incorporated to construct, own, operate and maintain a 270 MW coal-fired power plant (comprising two generating units) in Mukah, Sarawak (the Plant).

SEB had extended support to MPG on several occasions in the past. For instance, on 31 December 2017, MPG and Syarikat SESCO Berhad (SESCO, the state utility company of Sarawak and a wholly owned subsidiary of SEB) inked a new PPA (effective from 2018) with more favourable terms. SESCO also provided MPG with a letter of support (LoS) dated 21 August 2013 undertaking to ensure that the Company meets its financial obligations in respect of the Senior Sukuk for the tenure of the facility.

Unit 1’s prolonged outage since December 2019 caused the Plant to run on half its capacity. The Company’s financial performance took a steep decline into a net loss of RM9.39 mil in 1H FY Dec 2021 (FY Dec 2019: net profit of RM34.29 mil; FY Dec 2020: net profit of RM4.41 mil) due to a one-off provision and impairment totaling RM34 mil. Despite this, MPG’s pre-financing cashflow remained healthy, albeit contracting sharply to RM82 mil in FY Dec 2020 (FY Dec 2019: RM104 mil). In terms of cashflow coverage, MPG’s sukuk service coverage ratio (SSCR) of 2.22 times as at 28 June 2021 outperformed our projection of 1.48 times as the Company withheld dividend payments in favour of building its cash coffers.

As at end-June 2021, the Company had a total cash balance of RM93.64 mil – including RM36.5 mil in the Sukuk Payment Account, as required under the transaction terms – which is sufficient to cover its final sukuk obligation of RM36.5 mil in December 2021. 

 

Analytical contacts
Jack Kwan
(603) 3385 2532
jack@ram.com.my

Chong Van Nee, CFA
(603) 3385 2482
vannee@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 2021 by RAM Rating Services Berhad

 



Rating Rationale

Ratings on Mukah Power Generation Sdn Bhd

Loading...