MARC Ratings notes the recent fire incident at Tanjung Bin Energy Sdn Bhd (TBE), one of Malakoff Corporation Berhad’s (Malakoff) independent power producers, which has resulted in the plant’s full shutdown to allow for investigation and rectification. The extent of the loss and the restart timeline have yet to be determined. The rating agency is following the developments closely and will evaluate any credit impact on Malakoff Power Berhad’s (MPower) rated facilities as follows:
- RM5.4 billion Sukuk Murabahah Programme (AA-IS/Stable)
- RM1.2 billion Islamic Commercial Papers and RM1.2 billion Islamic Medium-Term Notes Programme (with a combined limit of RM1.2 billion) (MARC-1IS/AA-IS/Stable)
Malakoff is the parent company of MPower, and has provided a Kafalah guarantee on MPower’s sukuk. Malakoff is a non-operating holding company and is reliant on dividend income from its subsidiaries. The fire incident could necessitate TBE to seek assistance from Malakoff, potentially limiting Malakoff’s ability to provide support to MPower. Cash flows from both Malakoff and MPower serve as the primary sources of repayment for MPower’s sukuk obligations.
There is no immediate rating action on MPower at this juncture. While TBE may obtain some relief through insurance claims, the timing and quantum of such recoveries are subject to ongoing investigation and assessment by the insurers’ appointed loss adjuster and consultants. MARC Ratings understands that TBE has adequate liquidity — including cash balances and standby letters of credit — to meet its sukuk obligations over the next 12 months.
MARC Ratings will continue to monitor developments and assess any potential credit implications for MPower once more information becomes available.