Tenaga to raise up to RM4.15b sukuk, S&P rates 'BBB'

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) plans to raise up to US$1bil (RM4.15bil) under its multicurrency sukuk issuance programme and it has been rated BBB by  S&P Global Ratings.

The international ratings agency said on Monday the power giant's pecial-purpose company cTNB Global Ventures Capital Bhd had proposed to issue the US$1bil wakala trust certificates.

TNB Global Ventures Capital had entered into a "wakala" agreement with TNB (BBB+/Stable/--), an integrated utilities company whose 62.23% shareholding (as of Sept. 30, 2018) is with government agencies and corporations.

“We base the preliminary 'BBB' issue rating on the wakala trust certificates on the 'BBB' rating on the wakala sukuk programme. 

“The rating on the wakala sukuk  programme is one notch below the 'BBB+' issuer credit rating on TNB, reflecting significant subordination of the senior unsecured debt relative to other debt in Tenaga's consolidated capital structure,”  it said.
S&P said the proposed transaction fulfills the five conditions of its criteria for rating sukuk.

The rating agency said it assessed as remote the risk that a total loss event (TLE) jeopardises the full and timely repayment of the trust certificates. 

“Our opinion is based on our expectations that if lease assets form part of any drawdown,  they will come from a diversified portfolio of assets. 

“Nevertheless, S&P Global Ratings will reassess the remoteness of the TLE for each drawdown separately based on the actual composition of the lease assets portfolio, and may assign a different rating to the drawdown if our initial assumptions are not met,” it said. 

S&P said the preliminary rating on the trust certificates was based on draft  documentation and information as of Oct. 15, 2018. The final ratings will depend upon receipt and satisfactory review of all final transaction documentation.

Earlier, Reuters reported TNB hired BNP Paribas, CIMB, Citigroup and HSBC for a series of fixed income investor meetings in Asia and Europe ahead of a potential US dollar Reg S bond offering.

The roadshows will kick off on Oct 17 in Kuala Lumpur and end in London on October 22.

A bond sale, pending investor feedback, will be drawn from a multi-currency sukuk issuance programme via TNB Global Ventures Capital. The sukuk is expected to be rated A3/BBB (Moody’s/S&P).

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