KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has assigned a preliminary rating of AA-IS to Malakoff Power Bhd’s (MPower) proposed issuance of Sukuk Murabahah of up to RM5.4bil.
The ratings agency had on Friday affirmed its short-term rating of MARC-1IS on MPower’s outstanding RM200mil Islamic commercial papers (ICP) due in April 2014 issued under its RM300mil ICP Programme.
“The ratings outlook is stable,” it said, as proceeds from the proposed Sukuk Murabahah would be mainly used to early redeem MPower’s outstanding RM4.9bil Murabahah securities facility. The facility was assigned a AA-IS/Stable rating by MARC on Jan 11, 2013.
MARC said the rating on the sukuk reflected the consolidated credit profile of MPower and parent Malakoff Corporation Bhd to capture the strong credit linkages between the two entities. The linkages are achieved primarily as a result of cash flow dependencies between the parent and subsidiary as well as an explicit Kafalah guarantee extended by Malakoff for the proposed sukuk.
MPower operates three independent gas-fired power plants as well as two independent coal-fired power generation facilities, one of which is being built.
As for Malakoff, it is the leading developer of independent power plants in Malaysia with interests in a total of 5,020-megawatt (MW) of generating capacity, comprising six power stations which are in operation.
The group’s second domestic coal power project, which is the 1,000MW coal-fired Tanjung Bin Energy (TBE) power station, is expected to start commercial operations in March 2016.
The consolidated entity's fundamental credit strengths are the low business risks and relatively predictable cash flows generated by the group's five majority-owned power projects under long-term power purchase arrangements with Tenaga Nasional Bhd ( AAA/Stable).
MARC pointed out the revenue stream securing the sukuk notably includes repayments on RM3.0bil of loan stocks issued by four of its majority-owned domestic independent power producers.