RAM Ratings has affirmed the AA2/Stable rating of Solarpack Suria Sungai Petani Sdn Bhd's (3SP or the Company) ASEAN Green SRI Sukuk Wakalah of up to RM305 mil (2023/2043). 

The rating reflects the strong project economics and operational performance of 3SP's 90.88 MWac solar photovoltaic plant (the Plant) in Sungai Petani, Kuala Muda, Kedah, which underpins the Company's robust cashflow generating ability. Awarded under Malaysia'a Large Scale Solar 3 Scheme, the Plant achieved commercial operations on 8 March 2022. 

Under a 21-year power purchase agreement between 3SP and Tenaga Nasional Berhad, the Plant recorded full availability with no unscheduled outages in 9M 2023. Consequently, 3SP's net electrical output came in at 134.7 GWh in the same period, exceeding RAM's expectations by 5%. The Company's debt servicing ability as measured by the annual finance service coverage ratio (FSCR) (with cash balances, post-distribution) is expected to remain strong. Minimum and average FSCRs will be a respective 1.66 times and 2.02 times under RAM's sensitised analysis which assumes lower energy generation, higher operating expenses and capital expenditure. 

As the FSCR, without cash balances, may dip below 1 time in some years, cash retention is important to safeguard long-term liquidity buffers. The transaction will include a Sinking Fund Account (SFA) which will reserve for additional build up in cash balances to meet its sukuk obligations, in addition to the minimum required balance in the finance service reserve account (FSRA). 3SP must also maintain funds in the SFA as well as the Maintenance Reserve Account in accordance with the amounts in the base case financial model before any restricted payments, including distributions to shareholders, can be made. 3SP must further ensure that it achieves an FSCR of at least 1.65 times prior to making any such payment. 

While operating profit before depreciation, interest and tax (OPBDIT) amounted to RM26.0 mil in 9M1