S&P Global Ratings and Moody's Investors Service have rated Abu Dhabi-based solar energy firm Sweihan PV Power Co.’s (SPPC) proposed bonds stable.
SPPC, a UAE-based limited-purpose entity that owns, operates, and maintains the Noor photovoltaic (PV) power plant in Abu Dhabi, plans to sell $728 million of fixed-rate senior secured bonds due 2049.
SPPC is 60 percent owned by Abu Dhabi's TAQA while Japan's Marubeni Corp and China's JinkoSolar own 20 percent each. TAQA is 98.6 percent owned by the Abu Dhabi government.
The Noor facility, which achieved commercial operations in April 2019, sells electricity to Emirates Water & Electricity Company (EWEC) under a long-term take-or-pay power purchase agreement (PPA).
The proceeds of the bonds will be used to refinance existing debt, pay transaction expenses, fund the debt service reserve account and make a distribution to shareholders.
S&P Global Ratings has assigned its preliminary 'BBB+' rating to the proposed notes, indicating they are investment grade.
The stable outlook reflects the expectation of steady cash flows supported by the project's power purchase agreement (PPA) that eliminates market and price risk exposure, and the proven technology of the asset. "In addition, we anticipate the project will continue to have a moderately high likelihood of support from the government," said S&P Global in a note on Tuesday.
Similarly, Moody's has a Baa1 rating on SPPC, indicating medium-grade and subject to moderate credit risk. According to the rating agency this reflects the robustness of the PPA arrangement and the proven technology of the project.
In addition, the agency credits other strengths, including majority ownership by a government-related entity, and importance of the project in meeting government policy and project finance creditor protections, "including six-month debt service reserve account, distribution lock-up triggers, fully amortising debt, and bondholders' security package including direct agreements with step-in rights."
(Reporting by Brinda Darasha; editing by Seban Scaria)
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