Published on 20 Dec 2022.
RAM Ratings has reaffirmed the AA3/Stable rating of Jati Cakerawala Sdn Bhd’s (Jati or the Company) RM540 mil Sukuk Murabahah (2013/2023), premised on its strong cashflow coverage that is supported by dividend distributions from its sole subsidiary, Teknologi Tenaga Perlis Consortium Sdn Bhd (TTPC).
TTPC is an independent power producer which owns and operates a 650 MW combined-cycle, gas turbine power plant in Perlis. The plant’s sound operational performance and cashflow generating ability underline the AA1/Stable rating of TTPC’s RM835 mil Sukuk Murabahah (2013/2023).
The two-notch differential between the sukuk ratings of Jati and TTPC considers the low level of subordination of the Company’s sukuk based on its financing terms, in addition to its strong debt coverage level. TTPC can only declare dividends to its shareholders (i.e., Jati and Tenaga Nasional Berhad) upon meeting its own financing obligations and the necessary cash-trap requirements stipulated by its covenants. As such, Jati’s sukuk is structurally subordinated to TTPC’s sukuk in terms of cashflow priority and security.
Jati’s subordinated finance service coverage ratio (sub-FSCR) on the latest repayment date of its sukuk (31 July 2022) stood at 1.56 times, exceeding our earlier projection of 1.50 times due to lower-than-expected dividend distributions to the Company’s shareholders in FY Sep 2022. RAM’s stressed scenario projects that Jati will receive total dividend income of RM202.94 mil in FY Sep 2023. This is anticipated to comfortably cover the last two principal and profit payments of the RM540 mil sukuk, totalling RM119.55 mil, in 2023.
(603) 3385 2612
Chong Van Nee, CFA
(603) 3385 2482
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Ratings on Jati Cakerawala Sdn Bhd