Friday, December 9, 2011

RAM Ratings maintains AA1 ratings of Panglima's RM830m debt notes

KUALA LUMPUR (Dec 9): RAM Ratings has reaffirmed the AA1 rating of Panglima Power Sdn Bhd's RM830 million redeemable secured serial bonds, with a stable outlook.

The ratings agency said Panglima is an independent power producer (IPP) that owns and operates a 720-MW nominal-capacity, combined-cycle, gas-turbine power plant in Teluk Gong, Melaka.

'The rating remains supported by Panglima's strong business profile,' it said. In FY ended Jan 31, 2011, the company reported satisfactory operational performance as it met most of the operating parameters under its power purchase agreement (PPA) with Tenaga Nasional Berhad (TNB).

RAM Ratings said although Panglima was unable to claim full available capacity payments owing to two incidents of failure to despatch instructions, the shortfall was minimal and had no detrimental effect on the Company's debt-servicing ability.

Meanwhile, the plant's heat rates had been kept below the PPA's allowable levels, thus allowing Panglima to fully pass through its fuel costs to TNB.

The Company's debt-servicing ability remained intact in FY ended Jan 31, 2011, with a debt-service coverage ratio (DSCR) of 2.43 times (with cash balances, post-distribution).

'Looking ahead, Panglima is expected to register minimum and average DSCRs (with cash balances, post-distribution) of 1.60 times and 2.15 times, respectively, on principal repayment dates,' said the ratings agency.

RAM Ratings said the company will retain sufficient cash to prioritise its debt-servicing obligations and potential maintenance expenditure throughout the tenure of the serial Bonds.

However, Panglima remains exposed to regulatory and single-project risks, it said, adding these risks were similar to other IPPs.

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