23 November 2015

RAM Ratings has reaffirmed the AA1/Stable rating of Teknologi Tenaga Perlis Consortium Sdn Bhd's (TTPC or the Company) RM835 million Sukuk Murabahah (2013/2023). The rating reflects the Company's sturdy business profile, which is underscored by the strong terms of its power purchase agreement (PPA) with Tenaga Nasional Berhad (TNB - TTPC's sole off-taker), the commendable operational track record of its plant and the Company's robust debt-servicing ability.

Further comfort is derived from TNB's strong credit profile, which is rated AAA/Stable by RAM. As with other independent power producers, the Company's rating is moderated by inherent regulatory and single-project risks.

During the review period, TTPC had operated within the performance limits stipulated in the PPA and earned full available capacity payments, despite a major maintenance outage. While a breach of the availability target block requirement is expected at end-2015, the resultant financial impact on the Company is estimated to be minimal. Further, TTPC had managed to fully pass through its fuel cost to TNB.

Based on our sensitised analysis, TTPC is expected to generate an average annual pre-financing cashflow of about RM205.98 million for the remaining tenure of the Sukuk. This translates into a strong minimum finance service coverage ratio (with cash balances, post-distribution) of 1.80 times. Our cashflow analysis assumes that TTPC will pay dividends while adhering to its financial covenants throughout the Sukuk's tenure (i.e., on a forward-looking basis, as opposed to only in the year of assessment).

TTPC owns and operates a 650-MW combined-cycle, gas-turbine power plant in Kuala Sungai Baru, Perlis, under a 21-year PPA with TNB, which expires on 31 March 2024.

-Ends-

Media contact
Wang Wai Wah
(603) 7628 1110
waiwah@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.

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© Copyright 2015 by RAM Rating Services Berhad

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