RAM Ratings Enhances Criteria for Evaluating Sponsor Support in Project Finance Transactions

Published on 15 Apr 2025.

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RAM Ratings has revised and updated its criteria for evaluating sponsor support in project finance transactions. The update involves incorporating extraordinary financial support from sponsors, subject to meeting specific conditions, beyond the project's standalone credit risk profile. 

The enhanced criteria now allows for project finance transactions to be rated above the AA₃ rating cap typically imposed during the construction stage of greenfield projects and acknowledges the crucial role of sponsor support during this stage. The qualifying conditions for sponsors include only highly-rated sponsors with long-established industry and market experience with proven credibility; the uplift will be selectively applied on a case-by-case basis.

RAM’s refinement draws from our experience in rating project finance transactions, particularly in the post-COVID economy where such support had proven instrumental in maintaining project viability and crucially supported the rating. Based on our review of our portfolio of project finance ratings, we do not expect any impact on existing ratings. A summary and FAQ on RAM’s revised criteria “Criteria Enhancement: Evaluating Sponsor Support in Project Finance Transactions” is available on www.ram.com.my or at this link: https://www.ram.com.my/epurchase?module=subscriptionlist&pubid=4720

 

Analytical contacts
Chong Van Nee, CFA
(603) 3385 2482
vannee@ram.com.my

Siew Suet Ming
(603) 3385 2582
suetming@ram.com.my

 

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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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