Thursday, November 10, 2011

Tenaga falls on outlook downgrade, weak sentiment

KUALA LUMPUR (Nov'' 10): Shares of TENAGA NASIONAL BHD [] fell on Thursday in line with the weak markets but the decline was also affected by the downgrade by Standard & Poor's Ratings Services.

At 10.55am, Tenaga was down 14 sen to RM5.78 with 251,600 shares done.

The rating agency had revised downwards its outlook on Tenaga to negative from stable because it expected Tenaga's weakened profitability and higher operating costs to continue to weaken its significant financial risk profile.

However, S&P said it could revise the outlook to stable if the Malaysian government provides some fuel price relief that enables Tenaga to recover losses from fuel supply shortages.

RHB Research Institute said the downgrade on Tenaga's outlook could increase financing costs for borrowings related to the two hydroelectric projects costing a combined RM3.75 billion.

'For the extension of its Janamanjung power plant, we note that Tenaga issued RM5 billion sukuk prior to the outlook downgrade,' it said.

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