RAM Ratings has reaffirmed the AA2/Stable rating of Tanjung Bin Power's (TBP's) Sukuk Ijarah Programme of up to RM4.5 billion in nominal value (2012/2029) (the sukuk). The rating continues to reflect TBP's strong debt-coverage levels owing to robust cashflow generation and a well-matched debt-repayment profile. The rating is also supported by the company’s strong business profile, backed by the favourable terms of its power purchase agreement (PPA) with Tenaga Nasional (TNB), its sole off-taker.
TBP is an independent power producers (IPP) that has been granted the right to construct, own and
operate a 2,100-MW coal-fired power plant in Tanjung Bin, Johor, under a
PPA with TNB which expires on 27 September 2031.As with other IPPs, TBP remains exposed to regulatory and single-project risks, RAM Ratings says.
Following the progressive completion of the second phase of the power plant’s turnaround programme from July 2015 to February 2016, TBP had witnessed a notable operational improvement and claimed full available capacity payments (ACPs) and daily utilisation payments (DUPs) in fiscal 2015. In addition, the company managed to fully pass through its fuel cost to TNB.
Looking ahead, TBP’s credit metrics are expected to stay solid, with its minimum finance service coverage ratio (FSCR) standing at 1.65 times for the remaining tenure of the sukuk despite stress test assumptions of ACP and DUP losses in certain years. In RAM Ratings' assessment of its distribution policy, the company had represented to pay its subordinated debt obligations and dividends, subject to meeting financial covenants under the sukuk on a forward-looking basis, as opposed to only in the year of assessment.
Showing posts with label power. Show all posts
Showing posts with label power. Show all posts
Wednesday, 15 June 2016
Saturday, 6 February 2016
MARC confirms AAAIS rating on TNB Western Energy's sukuk
MARC has affirmed the rating of AAAIS on TNB Western Energy’s sukuk of up to RM4 billion with a stable outlook. An AAA rating from MARC denotes an "extremely strong ability to make payment on the instrument issued under the Islamic asset-based financing contract(s)".
TNB Western Energy is the funding vehicle for TNB Manjung Five, to undertake the construction of a 1,000MW ultra-supercritical coal-fired power plant under a 25-year power purchase agreement (PPA) with Tenaga Nasional (TNB). The power plant sits in close proximity to TNB’s four other existing power plants on a 325 hectare reclaimed island in Manjung, Perak, Malaysia.
The rating affirmation continues to reflect the equalisation of TNB Western Energy’s rating with its ultimate parent TNB’s AAA/stable rating based on guarantees and commitments from the national utility company. TNB has provided an unconditional and irrevocable project completion support guarantee for the power plant project as well as a rolling guarantee in favour of the sukuk holders to cover scheduled semi-annual distributions (principal and profit payments) in the event of plant underperformance. MARC’s approach is further underpinned by TNB’s undertaking to maintain full ownership of TNB Western Energy through its wholly-owned subsidiary, TNB Manjung Five, and by the multiple operational linkages between all three entities.
As at October 31, 2015, the project was 68.85% completed with the accrued project cost at RM3.4 billion. Despite a four-month delay in the tunnelling excavation works by the engineering, procurement and construction contractors due to a breakdown of the tunnel boring machine, the overall construction progress was 3.4% ahead of schedule as of end-October 2015. The scheduled commercial operation date (COD) on October 1, 2017 remains unchanged as the EPC contractors are currently expediting works at the affected area, bearing the cost being incurred in connection with the incident. MARC notes that in the event of a failure to achieve scheduled COD, TNB Manjung Five’s liability is adequately covered by provisions for liquidated damages claimable from the EPC contractors. At the same time, sukuk holders are protected against risk of completion delays by TNB’s funding support for scheduled distributions on the sukuk for up to a 12-month period post-scheduled COD.
Upon commissioning, TNB Manjung Five is expected to generate predictable cash flow streams provided by the PPA’s availability-based capacity payments as well as the pass-through of fuel and variable expenses to TNB. The project’s exposure to operations and maintenance (O&M) as well as fuel supply risks are deemed low due to the O&M operator and fuel supplier’s track record, experience and their strong linkages with TNB. Although the bullet repayment of RM1.3 billion due in 2033 will expose TNB Western Energy to significant refinancing risk, MARC draws comfort from the availability of a rolling guarantee from TNB and working capital facilities of up to RM200 million to address any short-term liquidity risks.
Based on the base case analysis, the project is expected to generate sufficient cash flow from operations to meet the scheduled financial obligations, except for the final principal repayment amount of RM1.3 billion due in 2033. This is due to the weak liquidity buffer of the projected cash flow given that the ending cash balances (excluding maintenance reserve account) range only between RM0.03 million and RM0.8 million. The minimum and average semi-annual finance service cover ratios (FSCR) of the base case analysis stood at 1.27 times and 1.32 times respectively. MARC’s sensitivity analysis indicates that the project cash flow will be able to withstand moderate plant performance shortfalls with minimum semi-annual FSCRs (with cash balances) above 1.00 time.
Interested?
Find out more about MARC's rating definitions (PDF; from page 53)
TNB Western Energy is the funding vehicle for TNB Manjung Five, to undertake the construction of a 1,000MW ultra-supercritical coal-fired power plant under a 25-year power purchase agreement (PPA) with Tenaga Nasional (TNB). The power plant sits in close proximity to TNB’s four other existing power plants on a 325 hectare reclaimed island in Manjung, Perak, Malaysia.
The rating affirmation continues to reflect the equalisation of TNB Western Energy’s rating with its ultimate parent TNB’s AAA/stable rating based on guarantees and commitments from the national utility company. TNB has provided an unconditional and irrevocable project completion support guarantee for the power plant project as well as a rolling guarantee in favour of the sukuk holders to cover scheduled semi-annual distributions (principal and profit payments) in the event of plant underperformance. MARC’s approach is further underpinned by TNB’s undertaking to maintain full ownership of TNB Western Energy through its wholly-owned subsidiary, TNB Manjung Five, and by the multiple operational linkages between all three entities.
As at October 31, 2015, the project was 68.85% completed with the accrued project cost at RM3.4 billion. Despite a four-month delay in the tunnelling excavation works by the engineering, procurement and construction contractors due to a breakdown of the tunnel boring machine, the overall construction progress was 3.4% ahead of schedule as of end-October 2015. The scheduled commercial operation date (COD) on October 1, 2017 remains unchanged as the EPC contractors are currently expediting works at the affected area, bearing the cost being incurred in connection with the incident. MARC notes that in the event of a failure to achieve scheduled COD, TNB Manjung Five’s liability is adequately covered by provisions for liquidated damages claimable from the EPC contractors. At the same time, sukuk holders are protected against risk of completion delays by TNB’s funding support for scheduled distributions on the sukuk for up to a 12-month period post-scheduled COD.
Upon commissioning, TNB Manjung Five is expected to generate predictable cash flow streams provided by the PPA’s availability-based capacity payments as well as the pass-through of fuel and variable expenses to TNB. The project’s exposure to operations and maintenance (O&M) as well as fuel supply risks are deemed low due to the O&M operator and fuel supplier’s track record, experience and their strong linkages with TNB. Although the bullet repayment of RM1.3 billion due in 2033 will expose TNB Western Energy to significant refinancing risk, MARC draws comfort from the availability of a rolling guarantee from TNB and working capital facilities of up to RM200 million to address any short-term liquidity risks.
Based on the base case analysis, the project is expected to generate sufficient cash flow from operations to meet the scheduled financial obligations, except for the final principal repayment amount of RM1.3 billion due in 2033. This is due to the weak liquidity buffer of the projected cash flow given that the ending cash balances (excluding maintenance reserve account) range only between RM0.03 million and RM0.8 million. The minimum and average semi-annual finance service cover ratios (FSCR) of the base case analysis stood at 1.27 times and 1.32 times respectively. MARC’s sensitivity analysis indicates that the project cash flow will be able to withstand moderate plant performance shortfalls with minimum semi-annual FSCRs (with cash balances) above 1.00 time.
Interested?
Find out more about MARC's rating definitions (PDF; from page 53)
Wednesday, 14 October 2015
Islamic Development Bank signs US$70 million development agreement for Tajikistan
The Islamic Development Bank (IDB) has signed a US$70 million development financing agreement with Tajikistan on the sidelines of the World Bank and
International Monetary Fund (IMF) annual meetings in Lima, Peru.
The agreement contributes towards financing a power grid network project connecting the Central and South Asian nations. The project aims to provide sustainable electricity flow between Kyrgyzstan, Tajikistan, Afghanistan and Pakistan in line with their regional economic integration framework.
It is based on the sale of surplus hydropower generated in Tajikistan and Kyrgyzstan, and is expected to impact the foreign currency income of both countries.
The agreement contributes towards financing a power grid network project connecting the Central and South Asian nations. The project aims to provide sustainable electricity flow between Kyrgyzstan, Tajikistan, Afghanistan and Pakistan in line with their regional economic integration framework.
It is based on the sale of surplus hydropower generated in Tajikistan and Kyrgyzstan, and is expected to impact the foreign currency income of both countries.
Sunday, 16 August 2015
Sukuk from Malaysia could help to fund Indonesian power projects
The ringgit sukuk market can be a viable funding option for the Indonesian power sector, suggests RAM Ratings.
Interested?
The Indonesian power sector is estimated to require US$132.2 billion for power infrastructure development over the next 10 years. While Indonesia’s national electricity utility company Perusahaan Listrik Negara will continue to be the key facilitator, private investments via independent power producers are expected to play a prominent role.
The private investments are likely to take the form of export credit and support from multilateral lending agencies, RAM Ratings said. “With a healthy appetite for project bonds, the ringgit sukuk market can also be a viable funding option for the Indonesian power sector,” said Chong Van Nee, Co-Head of Infrastructure and Utilities Ratings, RAM Ratings.
The private investments are likely to take the form of export credit and support from multilateral lending agencies, RAM Ratings said. “With a healthy appetite for project bonds, the ringgit sukuk market can also be a viable funding option for the Indonesian power sector,” said Chong Van Nee, Co-Head of Infrastructure and Utilities Ratings, RAM Ratings.
A ready pool of long-term investors, ample liquidity and an established sukuk framework are some of the advantages for Indonesian project managers thinking of relying on the ringgit bond market for funding. “We have seen Indonesian corporations tap the ringgit market and there could be room for Indonesian project financing funding, particularly power sector bonds, in the market,” said Chong.
RAM has published a report on the Indonesian power sector, Power Up or Power Out, as part of the ASEAN Power Series. The industry is characterised by its robust electricity demand growth (CAGR of 7.1% from 2004 to 2014) and a pressing need for rapid electrification in support of the country’s aggressive economic growth ambition. Despite its population of more than 250 million, Indonesia’s electrification ratio is deemed low – at 84.3% as at end-2014 – relative to most of its ASEAN neighbours.
Interested?
Non-subscribers may purchase the report at RM530 (inclusive of GST) per copy. For further enquiries, please contact Ms Ain at +603 7628 1108 or Mr Faiez at +603 7628 1104.
Read the Suroor Asia blog post about RAM Ratings' findings on sukuk in the Malaysian power market.
Read the Suroor Asia blog post about RAM Ratings' findings on sukuk in the Malaysian power market.
Wednesday, 29 July 2015
Sukuk dominates in independent power producer bond issues in Malaysia
Based on RAM’s data and information gleaned from Bank Negara Malaysia's FAST (Fully Automated System for Issuing/Tendering) system, sukuk has become more prominent as part of power funding over the years, with more than 93% of independent power producer (IPP) bond issues comprising sukuk after 2000, compared to only 25% before that.
RAM Ratings notes that the Malaysian power industry has been one of most active sectors tapping the local bond market for its funding needs, with tenures ranging from 10 to 30 years. The observation is published in the maiden report in its ASEAN Power Series, Energising a steady growth path.
The report presents RAM’s assessment of the power sector’s structure, regulatory landscape, capacity and fuel-supply situation, the key players and how these influence the industry’s growth and infrastructure funding.
Interested?
Non-subscribers may purchase the report at RM530 (inclusive of GST) per copy. For further enquiries, please contact Ms Ain at +603 7628 1108 or Mr Faiez at +603 7628 1104.
Wednesday, 29 April 2015
Mother's Day gifts with a technology theme
It's amazing what technology can do these days. These gift ideas for Mother's Day (Sunday, May 10, 2015 in Singapore) are all designed to make life easier:
Staying visible on the run
Working out with PowerDot
The world’s first portable muscle stimulator, PowerDot (S$239), is another potential add-on to a fitness regime. Muscle stimulators are used to improve muscle strength and tone.
 |
| Source: Nespresso. |
Coffee to start the day
Create and indulge in the Nespresso experience with the red Inissia – the lightest and most compact machine in the range. A promotional price of S$248 is in force up to 30 June 2015.
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| Source: Hyper. |
Extra power for the afternoons
Hyper’s Pearl (S$49.90) is a compact mirror with an integrated power bank. The circular case comes in red, silver and gold.
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| Source: OPPO. |
Multitasking help
The S$349 OPPO Mirror 3 functions as a universal remote that allows the user to control a variety of household electrical appliances, all from one device, while its LTE-compatible SIM-card slots will help mum keep in touch. The phone launches in May.
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| Source: New Balance. The REVlite 890v5. |
Staying visible on the run
Playing on the balance of light and darkness that occurs when the earth, moon and sun are aligned in a straight line, New Balance's the Solar Eclipse Pack consists of the REVlite 890v5, Fresh Foam Boracay and Fresh Foam Zante. All three running silhouettes, each of which is sold separately (S$169 to S$179), feature reflective properties for day and night runs, with reflective taping used on the heel.
 |
| Source: PowerDot. |
Working out with PowerDot
The world’s first portable muscle stimulator, PowerDot (S$239), is another potential add-on to a fitness regime. Muscle stimulators are used to improve muscle strength and tone.
Thursday, 22 May 2014
Meezan Bank deploys energy-savvy ATMs
Diebold and its distributor TouchPoint are deploying 50 energy-efficient Diebold 429 automated teller machines (ATMs) for Pakistan's first and largest Islamic commercial bank.
Based in Karachi, Pakistan, Meezan Bank is the 8th largest bank in
Pakistan in terms of branch network, and provides a range of
Islamic banking products and services. It operates more than 350
branches in more than 100 cities across the country, as well as a
network of more than 315 ATMs. Expanding its self-service network with
new Diebold 429 ATMs is helping the bank remain one of Pakistan's fastest-growing banks and emphasises its commitment to the environment.
The Diebold 429 is the first energy-efficient ATM deployed in Pakistan. It operates on as little as 70 watts of power and features an intelligent-powered management system that counteracts unreliable power availability to enhance ATM uptime for Meezan Bank's customers.
"We are committed to enhancing the convenience, availability and sustainability of banking services for our customers," said Ariful Islam, Deputy Chief Executive Officer, Meezan Bank. "Our new ATMs will enable us to expand our reach to more customers in remote areas where power availability is a challenge."
The Diebold 429 ATM offers uninterrupted power availability by continuously monitoring the power required to complete transactions and automatically alternating between three possible power sources – solar panel, alternating current (AC) grid and internal battery. The ATM switches seamlessly between these sources to maximise uptime and reduce energy consumption by up to 40% compared with other ATMs.
Based in Karachi, Pakistan, Meezan Bank is the 8th largest bank in
Pakistan in terms of branch network, and provides a range of
Islamic banking products and services. It operates more than 350
branches in more than 100 cities across the country, as well as a
network of more than 315 ATMs. Expanding its self-service network with
new Diebold 429 ATMs is helping the bank remain one of Pakistan's fastest-growing banks and emphasises its commitment to the environment. The Diebold 429 is the first energy-efficient ATM deployed in Pakistan. It operates on as little as 70 watts of power and features an intelligent-powered management system that counteracts unreliable power availability to enhance ATM uptime for Meezan Bank's customers.
"We are committed to enhancing the convenience, availability and sustainability of banking services for our customers," said Ariful Islam, Deputy Chief Executive Officer, Meezan Bank. "Our new ATMs will enable us to expand our reach to more customers in remote areas where power availability is a challenge."
The Diebold 429 ATM offers uninterrupted power availability by continuously monitoring the power required to complete transactions and automatically alternating between three possible power sources – solar panel, alternating current (AC) grid and internal battery. The ATM switches seamlessly between these sources to maximise uptime and reduce energy consumption by up to 40% compared with other ATMs.
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