RAM Ratings has reaffirmed the AA1/stable rating of Ranhill Powertron Sdn Bhd's (the Company) RM540 million Islamic MTN (IMTN) Programme (2015/2019). The reaffirmation of the rating reflects the Company's robust cashflow-generating ability, backed by favourable power purchase agreement (PPA) terms as well as its healthy cash retention, supported by stringent distribution covenants under the Trust Deed. As with other independent power producers (IPPs), the rating is moderated by inherent regulatory and single-project risks.
Ranhill Powertron's operating performance remained resilient in FY Dec 2014, despite a major operational mishap in September. Nevertheless, the Company incurred minor cashflow losses from the incident and had rectified the problem within 2 weeks. Ranhill Powertron had subsequently regained its ability to earn full capacity payments, by consistently surpassing the minimum operating requirements of the PPA. Meanwhile, the Company managed to fully pass through its fuel cost to its sole off-taker, Sabah Electricity Sdn Bhd (SESB).
Based on our sensitised cashflow projections, Ranhill Powertron is expected to achieve a strong annual finance service coverage ratio (with cash balances, post-distribution and measured on principal repayment dates) of at least 1.89 times throughout the remaining tenure of the IMTN, in line with AA1-rated transactions. The stringent covenants in the Company's Trust Deed, which limit distributions, support the maintenance of a robust cash buffer.
Ranhill Powertron operates a 190-MW combined-cycle gas-turbine power plant in Kota Kinabalu, Sabah, under a 21-year PPA with SESB.
Media contact
Wang Wai Wah
(603) 7628 1110
waiwah@ram.com.my
© Press Release 2015
