Moody`s Investors Service has assigned a provisional (P)A3 rating to power giant Tenaga Nasional Bhd unit`s proposed sukuk notes to be issued under the US$2.5bil multi-currency sukuk issuance programme.
The sukuk programme was established by TNB Global Ventures Capital Berhad, a special purpose
vehicle set up in Malaysia by Tenaga (A3 stable).
The ratings agency said on Wednesday the rating outlook is Stable.
The proposed sukuk will represent the first drawdown under the programme, which is rated (P)A3 and is in line with Tenaga`s long-term senior unsecured rating.
The provisional rating on the proposed sukuk notes will be removed upon completion of the issuance, satisfactory review of the final terms and conditions, and legal opinions.
Moody`s considers the sukuk to be a senior unsecured obligation of Tenaga.
It said the rating reflects (i) the ultimate obligation of Tenaga to ensure that the periodic distribution amount is always maintained; and (ii) the existence of a purchase undertaking.
This implies that the sukuk holders ultimately rely on the creditworthiness of Tenaga for repayment when the trust is dissolved.
"Moody`s rating of the proposed sukuk is equivalent to Tenaga`s senior unsecured rating, as the sukuk are viewed as being commensurate with a senior unsecured payment obligation, with sukuk holders ultimately relying on Tenaga for return and principal repayment," said a Moody`s vice president and senior analyst Abhishek Tyagi.
The proceeds from the proposed sukuk will be used primarily for the general corporate purposes.
At maturity or upon a dissolution event, Tenaga is required to fully repay, including any unpaid and accrued periodic distribution amount, the aggregate face value of the sukuk.
Moody`s said as at May 31, 2016, the government of Malaysia and related entities control 60.2% shareholding of Tenaga.
As of August 2015, Tenaga had an installed capacity of 11,708MW (including Kapar Energy Ventures), accounting for about 53% of the installed capacity in Peninsular Malaysia, which accounts for 80% of the country`s population.
Tenaga`s 83%-owned Sabah Electricity supplies electricity in Sabah.
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