ANNOUNCEMENT DETAILS

Stay updated on Malaysian bonds and sukuk.

ANNOUNCEMENT DATE
:
30-Nov-2021
CATEGORY
:
GREEN FINANCING
SUB-CATEGORY
:
GREEN FINANCING
TITLE
:
SPARKS ENERGY 1 SDN BHD
ISSUER NAME
:
BGMC BRAS POWER SDN. BHD., IDIWAN SOLAR SDN BHD
DESCRIPTION
:
CONTENT
:
MARC has affirmed its preliminary AA-IS rating on Sparks Energy 1 Sdn Bhd's proposed ASEAN Green Sustainable and Responsible Investment (SRI) Sukuk Murabahah of up to RM220.0 million. The rating outlook is stable. 

Sparks Energy 1 is a special purpose vehicle incorporated to raise funding to develop two 30MWac solar power plants in Kuala Muda, Kedah and Machang, Kelantan. The rated sukuk will be issued upon achievement of the commercial operation dates (COD) for both plants; proceeds will be used to repay the outstanding bridging loan of RM220.0 million used to fund plant construction. In light of these factors, the rating only considers the operational phase of the project.

The affirmed rating is driven by Sparks Energy 1's projected adequate cash flow coverage on the back of project companies BGMC BRAS Power Sdn Bhd's and Idiwan Solar Sdn Bhd's 21-year solar power purchase agreements with Tenaga Nasional Berhad (rated AAA/Stable). The rating also considers the project's strong finance-to equity ratio of 53:47. Moderating the rating are risks associated with variability of solar resource. 

MARC notes that the plants' construction has been delayed by logistical issues as a result of movement restrictions due to the COVID-19 pandemic as well as unfavourable weather conditions. Construction is currently being undertaken beyond the walkaway event dates of September 18 (Kuala Muda) and October 16 (Machang); these dates were extensions from the original walkaway dates in mid-June 2021 as approved by the Energy Commission. The rating agency views termination risk to be low, given the impending completion of both plants. Construction is expected to be completed by December 31, 2021 (Kuala Muda) and January 31, 2022 (Machang), with further walkaway date extensions applied up to end-February 2022 and end-April 2022. This includes an additional two to three months' buffer for the commissioning stage. 

The total project cost for both projects remain within the proj
ATTACHMENT
:
SOURCE
:
BURSA