RAM Ratings raises outlook on Cypark Ref's sukuk rating to stable, affirms AA3 rating

RAM Ratings has revised the outlook on the AA3 rating of Cypark Ref Sdn Bhd's (Cypark Ref or the Issuer) RM550.0 mil SRI Sukuk Murabahah Programme (2019/2041) (the Sukuk) to stable from negative while concurrently affirming the rating.

The outlook revision follows the completion of two floating solar photovoltaic (PV) plants in Danau Tok Uban, Kelantan (the DTU plants) in January 2025. Along with the ground-mounted Sik plant, operational since January 2022, Cypark Ref will receive steady cashflow from the three 30 MWac solar PV projects (the Projects or the Plants) to service its Sukuk. The RM46.0 mil irrevocable and unconditional bank guarantees (BGs) further anchors the Issuer's liquidity profile and debt coverage.

Cypark Ref's liquidity position remains strong, thanks to the support of its shareholders - Cypark Renewable Energy Sdn Bhd (CRE, the engineering, procurement, construction and commissioning contractor), Cypark Resources Berhad (CRB, its ultimate holding company and sponsor) and Jakel Capital Sdn Bhd (largest shareholder of CRB). CRB remains committed to providing ready financial support to Cypark Ref for an upcoming June 2025 sukuk payment, backed by the BG facility. To date, CRB has injected RM31.9 mil into the transaction while maintaining the BGs.

During the course of the review, we were informed that a planned road construction project by Jabatan Kerja Raya Kedah, Bahagian Jalan, will necessitate the relocation of about 8.7% of the solar panels located at the periphery of the Sik plant. The relocation, anticipated to take six months under RAM's stressed scenario, could result in a 5.0% energy output reduction in 2025, which is manageable. The Issuer is currently in discussions with the authorities on the relocation exercise and compensation from the government. For prudence, we have included the full additional capital expenditure in our credit assessm