profile search
latest updates
Press Release
16 Jan | Tuesday
RAM Ratings reaffirms MIEB’s AAA and AAA(s) sukuk ratings

RAM Ratings has reaffirmed the AAA/Stable rating of Manjung Island Energy Berhad’s (MIEB) RM3.86 billion Islamic Securities (2011/2030) (Series 1) as well as the enhanced AAA(s)/Stable rating of its RM990 million Islamic Securities (2011/2031) (Series 2). The reaffirmation of Series 1’s rating is based on TNB Janamanjung Sdn Bhd’s (TNBJ or the Company) strong cashflow-generating capability and superior cash buffer, which enables it to service MIEB’s financial obligations. TNBJ is the sole cashflow source of MIEB, a trust-owned special-purpose vehicle, established to raise funding for the construction of a 1,000-MW coal-fired power plant (GF2), adjacent to the existing 2,100-MW coal-fired Sultan Azlan Shah power plant in Perak (GF1) (collectively, the Facilities). Accordingly, we recognise the strong credit link between the 2 entities and view both companies in aggregate. Meanwhile, the reaffirmation of Series 2 reflects the credit strength of an irrevocable and unconditional corporate guarantee from Tenaga Nasional Berhad (TNB).

TNBJ has a strong business profile, underscored by the terms of its power purchase agreements with TNB for GF1 and GF2, respectively. TNBJ demonstrated a substantial operational turnaround in respect of the Facilities in FY Aug 2017 following improvement initiatives undertaken at the units. As a result, Available Capacity Payment (ACP) reductions narrowed to 1.2% (of full ACPs) in FY Aug 2017 compared to last year’s 11.6%. Additionally, the Company had managed to fully pass through fuel costs to TNB, its sole off-taker.

Based on RAM’s sensitised cashflow projections, TNBJ is expected to generate an average pre-financing cash flow of about RM460 million per annum. This, coupled with the Company’s substantial cash holdings accumulated over the past decade of GF1’s operations, is envisaged to translate into superior minimum and average finance service coverage ratios (with cash balances, post-distribution) of a respective 2.00 times and 4.74 times throughout the tenure of Series 1. Series 2 is structured to have a RM990 million bullet repayment on 25 November 2031, which TNBJ is anticipated to be able to meet, given that it has ample room to manage its distributions to ensure that financial obligations under Series 2 are fulfilled. It should be noted that as with other independent power producers, TNBJ is exposed to force majeure and regulatory risks.

Analytical contact
Nurhayati Sulaiman
(603) 7628 1040
yati@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my

Date of release: 16 January 2018

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

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
© Copyright 2018 by RAM Rating Services Berhad’s

Print Mail Twitter LinkedIn Facebook Google+
Past Articles
2018
October
September
August
July
June
May
April
March
February
January
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
December
November
September
July
June
May
April
March
2015
June
May
April
March
February
January
2014
December
November
October
September
August
July
June
May
April
March
February
January
2013
December
October
July
May
April
March
2012
December