KUALA LUMPUR: RAM Ratings has reaffirmed the AAA/Stable rating of Bakun Hydro Power Generation Sdn Bhd’s RM5.54 billion Sukuk Murabahah, reflecting the company’s superior cash-flow debt coverage, backed by predictable cash flow and minimal demand risk.
The ratings agency said except for the year 2029, given the lumpy repayment of the unrated RM1.0 billion government-guaranteed (GG) Sukuk in 2028, Bakun Hydro’s finance service coverage ratio (FSCRs, with cash balances) are expected to be robust, coming in at least two times throughout the Sukuk’s tenure.
It added that Bakun Hydro’s cash-flow coverage has improved substantially since its acquisition by Sarawak Energy Bhd (SEB).
As at the last repayment date of Aug 11, 2020, RAM Ratings said Bakun Hydro’s FSCR stood at 3.72 times – higher than its projected 2.87 times, underscored by reduced outages and cost savings pertaining to synergistic benefits from SEB’s other plants, plus the deferment of some capital expenditure.
“Going forward, the company’s FSCRs are anticipated to remain resilient, supported by highly predictable cash flow, from selling take-or-pay electricity to Syarikat Sesco Bhd (Sesco),” RAM Ratings said.
Under RAM’s sensitised case, Bakun Hydro may need a single top-up of about RM120.0 million from the government in 2029 to support its FSCR at two times, given the lumpy repayment of the GG Sukuk in the previous year.
“Bakun Hydro may consider refinancing the GG Sukuk closer to the bullet repayment date in which case the top-up is not required,” it added.
Bakun Hydro owns and operates the 2,400-megawatt Bakun hydroelectric plant under its power purchase agreement with Sesco that runs up to March 31, 2043.
The Bakun dam, which the company owns, is Malaysia’s largest producer of hydro-powered electricity and key to the development of the Sarawak Corridor of Renewable Energy.
The first unit of the plant was commissioned in August 2011, with full commissioning achieved in July 2014. — Bernama
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