MARC Ratings has revised the outlook on UiTM Solar Power Sdn Bhd’s outstanding RM192.3 million Green SRI Sukuk to stable from negative. The rating on the sukuk is maintained at A+IS.
The outlook revision considers the improvement in UiTM Solar’s liquidity and cash flow coverage metrics following the full receipt of insurance proceeds of RM20.0 million in December 2022 for equipment damage and business interruption. Additionally, the performance of its 50MWac plant since resumption of full operations in August 2022 has remained in line with expectations, with plant availability averaging 96.3% up to February 2023.
The plant had previously been impacted by a prolonged shutdown resulting from damage to its transformer and gas-insulated switchgear in November 2021. In the interim, the company had relied on its existing liquidity to meet sukuk obligations. This was buffered by an RM11.0 million finance service reserve account (FSRA) bank guarantee to meet its FSRA balance requirements. The bank guarantee has been cancelled in January 2023 with the receipt of the insurance proceeds. Designated account balances have improved to RM36.0 million as at end-February 2023.
Notwithstanding the plant’s operational performance, we note that electricity generation recorded up to February was 16% below P90 projections, mainly due to lower irradiance at the project site in Gambang, Pahang, as a result of an extended monsoon season. MARC Ratings will continue to monitor the performance of UiTM Solar’s plant and will undertake a full review of the rating within the next six months. The rating and/or outlook could be improved if the plant is able to demonstrate performance consistently in line with expectations, and the company maintains a healthy liquidity buffer. Conversely, downward pressure would arise if operational hitches significantly impact cash flow generation.