Rating action                  

MARC Ratings has affirmed its rating on Ranhill Powertron II Sdn Bhd’s (RPII) outstanding RM350.0 million Islamic Medium-Term Notes (IMTN) programme guaranteed by Bank Pembangunan Malaysia Berhad (BPMB) at AAA_IS(bg). The rating outlook is stable.

The affirmation reflects the unconditional and irrevocable guarantee from BPMB which carries a financial institution rating of AAA/Stable from MARC Ratings. BPMB replaced Danajamin Nasional Berhad (Danajamin) as the guarantor of the IMTN programme pursuant to the transfer of business, assets and undertakings of Danajamin to BPMB effective March 1, 2023. 

RPII owns and operates the 190MW combined-cycle gas turbine (CCGT) Rugading Power Station in Sabah under a 21-year power purchase agreement (PPA) with Sabah Electricity Sdn Bhd (SESB). Operational since 2011, the plant has performed within PPA requirements for 2022. Its unplanned outage rate (UOR) was within the PPA-stipulated limit of 4%, entitling RPII to full capacity payments (CP) which amounted to RM97.5 million for the year. As the plant’s heat rate was within the PPA requirement, it managed to fully pass through its fuel cost, receiving energy payments (EP) of RM106.9 million. Accordingly, revenue rose to RM120.1 million in 2022 (2021: RM106.9 million).

However, higher operating costs due to planned maintenance led to slightly lower adjusted cash flow from operations (CFO) of RM75.9 million (2021: RM76.5 million). Liquidity as reflected by cash balances of RM92.3 million as at end-January 2023 is sufficient against a total RM59.5 million principal repayment and interest payment due in June 2023. From 2024 onwards, CFO is projected to decline to an average of RM50.0 million as the capacity rate financial (CRF), a component of CP, will reduce to RM23.80/kW/month from RM36.50/kW/month starting from May 2023. Notwithstanding this, the projected minimum and average financial service coverage ratios of 1.87x and 2.04x for the remaining sukuk tenure provide sufficient buffer against the covenanted 1.25x.

The stable outlook on the guaranteed notes reflects the outlook of BPMB’s rating. 

The rating on the guaranteed notes will be lowered in the event of a downgrade in BPMB’s rating.