MARC reaffirms rating on TTM Sukuk’s programme

PETALING JAYA: Malaysian Rating Corp Bhd (MARC) has affirmed its AAAIS rating on the Trans Thailand-Malaysia gas pipeline project funding vehicle, TTM Sukuk Bhd’s RM600mil sukuk murabahah, with a stable outlook.

In a statement, the ratings agency said that its rating on the sukuk murabahah programme reflected TTM Sukuk’s highly-expected strong support from the gas pipeline project’s sponsors, Petroliam Nasional Bhd (Petronas) and PTT Public Company Ltd.

This was on the back of both companies’ strategic and vested interests to ensure the success of the Trans Thailand-Malaysia project.

TTM Sukuk is wholly owned by Trans ThaiMalaysia (Thailand) Ltd, a 50:50 joint-venture (JV) between Petronas and PTT, the national oil companies of Malaysia and Thailand, respectively.

“The project’s standalone credit profile is supported by the stable and predictable nature of project cash flow on the back of a cost-plus tariff structure under the long-term service agreements with PTT and Petronas.

The JVs availability-based capacity revenue is calculated based on a unit capacity reservation charge that incorporates operating costs and finance service obligations, in addition to providing adequate shareholders’ return.

“The stable outlook reflects MARC’s expectation of the JV’s satisfactory operating performance and the project sponsors’ continued commitment to the project. Any deterioration in the JV’s credit metrics and the Trans Thailand-Malaysia project’s strategic importance to the project sponsors will exert pressure on the rating,” said MARC in the state- ment.

The Trans Thailand-Malaysia project consists of two gas pipelines between the Malaysia-Thailand Joint Development Area and the industrial city of Rayong in Thailand.

MARC has pointed out that the AAAIS rating is not constrained by Thailand’s foreign currency rating, notwithstanding the fact that the major offtaker of the project’s second phase, PTT and the JV are Thailand-based.

“The project revenue from the second phase of Trans Thailand-Malaysia is denominated in US dollars or its Thai baht equivalent.

“The assessment is based on MARC’s view that Petronas has a strong incentive to provide ringgit liquidity in the event of transfer and convertibility issues arising from any foreign-exchange restrictions imposed by the Thai government,” it said.