RAM accords ‘AA3 rating’ to Edra Energy’s proposed sukuk

KUALA LUMPUR: RAM Ratings Services Bhd has assigned a “AA3/stable” rating to Edra Energy Sdn Bhd’s (EESB) proposed sukuk wakalah of up to RM5.28 billion in nominal value (2017/2037).

EESB is an independent power producer (IPP) that had signed a 21-year power-purchase agreement with Tenaga Nasional Bhd.

The company was incorporated to design, construct, own, operate and maintain a 2,242MW combined-cycle, gas-turbine power plant — the largest gas power plant in Malaysia — in Alor Gajah, Melaka.

Proceeds from the proposed sukuk amounting to RM5.09 billion would mainly be utilised to fund the construction of the plant.

In a statement yesterday, RAM Infrastructure and Utilities Ratings co-head Chong Van Nee said the rating reflected EESB’s strong project economics, underscored by stable cash flow generation, resulting in a minimum finance service coverage ratio of 1.5 times under RAM’s sensitised case upon completion of the plant.

“Given that the technology used in the turbine is untested and that no other plant of this scale in commercial operation globally, the company is exposed to technological risks.

“As the plant is in its construction stage and equity will be progressively injected into the project throughout the construction period, this also exposes the project to construction-related risks and uncertainty in funding,” she added. Bernama