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20 Nov | Thursday
RAM Ratings reaffirms AA1/stable rating of Ranhill Powertron’s IMTN Programme

RAM Ratings has reaffirmed the AA1/stable rating of Ranhill Powertron Sdn Bhd’s (Ranhill Powertron or the Company) RM540 million IMTN Programme. The reaffirmation of the rating continues to reflect Ranhill Powertron’s combined-cycle gas-turbine power plant’s robust cashflow-generating capability, backed by favourable power purchase agreement terms as well as its strong cash retention ability, supported by stringent distribution covenants under the transaction. As with other independent power producers (IPPs), the rating is moderated by inherent regulatory and single-project risks.

During the review period, the plant’s overall operating performance remained strong, despite 2 separate technical malfunctions that occurred in September and October 2013 which affected 2 of the plant’s gas turbines. Cashflow losses arising from these incidents are not material as repair costs for the first incident were borne by the equipment supplier while the second was covered by insurance claims. Both turbines have been operational since October and December 2013, respectively. Notwithstanding these hiccups, Ranhill Powertron suffered minimal capacity payment losses and had managed to fully pass through its fuel cost.

Based on our sensitised cashflow projections, the Company is expected to achieve a strong minimum annual Finance Service Cover Ratio (with cash balances, post-distribution and measured on principal repayment dates) of at least 1.94 times throughout the remaining tenure of the IMTN, which is above RAM’s threshold of 1.80 times for AA1-rated transactions. We note that stringent covenants in the Company’s Trust Deed support the maintenance of a robust cash buffer by limiting distributions.

Ranhill Powertron operates a 190-MW combined-cycle gas-turbine power plant in Kota Kinabalu, Sabah, under a 21-year power-purchase agreement with Sabah Electricity Sdn Bhd.

Media contact:
Asif M Noh
(603) 7628 1175
asif@ram.com.my

source: RAM Rating Services Berhad
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