RAM Ratings affirms reNIKOLA Solar II's AA2 sukuk rating

RAM Ratings has affirmed the AA2/Stable rating of reNIKOLA Solar II Sdn Bhd's (reNIKOLA Solar II or the Issuer) RM390 mil ASEAN Green SRI Sukuk Programme (2023/2041). The rating affirmation is premised on its strong debt coverage ratios,
underpinned by the healthy energy generation and strong cashflows from the two underlying operating solar photovoltaic (PV) plants in Kuala Muda and Machang (the Plants). The Plants are held by its sister companies, RE Kuala Muda Sdn Bhd (REKM) and RE Machang Sdn Bhd (REMC) (Project Companies). Favourable power purchase agreement (PPA) terms between the Project Companies and offtaker, Tenaga Nasional Berhad (TNB, issues rated AAA/Stable by RAM), which translates to minimal demand risk for the Plant's output, also support the rating. 

The Plants recorded full availability without any unscheduled outages since they commenced operations in March 2022 and April 2023. Good weather conditions last year enabled both Plants to generate aggregate net energy output (NEO) of 128,529
MWh, exceeding RAM's forecast by 5.1%. However, the Plants' NEO was 8% lower yo-y in 8M 2025 and 1.5% below expectations due to unfavourable weather. Despite this, the Plants' NEO remained above the PPAs' minimum requirements. The Plants'
output also recovered to above sensitised assumptions in recent months amid better weather. We expect the Plants to register healthy performances that are within our sensitised assumptions over the longer run. 

RAM's sensitised cashflows incorporate lower energy generation and heftier operating expenditure. Even so, reNIKOLA Solar II is projected to maintain minimum and average annual post-distribution finance service coverage ratios of 1.65 times and
1.95 times, respectively, over the Sukuk's remaining tenure, supportive of its AA2 rating. As with other solar farms, the Plants are exposed to solar irradiance especially with the increasingly erratic weather cond