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26 May | Friday
RAM Ratings: Proposed acquisition by Sarawak Energy does not affect Sarawak Hidro’s rating
RAM Ratings after having assessed the proposed acquisition of Sarawak Hidro Sdn Bhd (the Company) bySarawak Energy Berhad, maintains its AAA/Stable rating of the Company’s Sukuk Murabahahof up to RM5,540 million in Nominal Value (2016/2031). While Sarawak Hidro’s shareholding will change, the Federal Government’s commitment to make up any liquidity shortfall in respect of the Company’s targeted finance service coverage ratio (FSCR) remains intact, which is a key factor supporting the rating. This commitment is articulated in an irrevocable and unconditional letter of undertaking, effective throughout the tenure of the Sukuk.
 
This, coupled with Sarawak Hidro’s existing cashflow generation, would ensure the Company maintains a superior FSCR (with cash balances, post-distribution, calculated on payment dates) of 2 times throughout the Sukuk’s tenure – a level commensurate with an AAA rating under RAM’s project-finance rating framework.
 
The Company is an independent power producer that owns and operates the 2,400 MW Bakun plant, under a power purchase agreement which runs up to 31 March 2043. The conditional share sale agreement, under which Sarawak Energy will acquire full ownership of the Company from the Minister of Finance (Incorporated), was signed on 22 May 2017.
source: RAM Rating Services Berhad
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