PT Cikarang Listrindo proposed bond and will issues via special purpose vehicle, Signal Capital B,V. Standard & Poor's Ratings Services today assigned its BB- corporate credit ratings on Cikarang Listrindo, natural gas-fired electricity power producer. The outlook is stable.
At the same time, Standard & Poor's assigned its BB- rating on the senior secured notes to be issued by Listrindo Capital B.V., a wholly owned special-purpose subsidiary incorporated in The Netherlands, established solely for issuing this debt instrument.
The rating on Cikarang reflects project completion risk, a single site concentration, counterparty risk, and weak capital structure. These risks are partially offset by the company's diverse customer base, high availability factor, and regulatory protection.
The rating on Cikarang reflects project completion risk, a single site concentration, counterparty risk, and weak capital structure. These risks are partially offset by the company's diverse customer base, high availability factor, and regulatory protection.
The proceeds from the notes are intended primarily for refinancing the existing debt, financing the balance of planned capital expenditure requirements under its capacity expansion program, and for general corporate purposes.
Nevertheless, Cikarang Listrindo has diverse customer base with 1,559 industrial customers (79% of Kilovolt-Ampere sales to foreign-owned companies), spanning five industrial estates. While there are no take-or-pay contractual commitments with these clients, Standard & Poor's believes reliability and acceptable tariffs mitigate this risk.
In addition, Cikarang Listrindo average availability factor has been high at more than 90% with low network losses of less than 1%. These customers should provide Cikarang Listrindo with adequate debt service coverage, in addition to PLN's take or pay monthly payments (approximately US$4.6 million/month) regardless of dispatch levels and Cikarang subjected only to a fixed capacity factor of 72%.
Sales terms include full pass-through of gas costs, limiting volatility risks, and payments are in Indonesian rupiah linked to the U.S. dollar at the prevailing rate, thus reducing Cikarang's foreign exchange exposure. In addition, the power plant has an exclusive independent power producer license that enables it to generate and distribute energy to industrial customers within this specific geographic zone.
Nevertheless, Cikarang Listrindo has diverse customer base with 1,559 industrial customers (79% of Kilovolt-Ampere sales to foreign-owned companies), spanning five industrial estates. While there are no take-or-pay contractual commitments with these clients, Standard & Poor's believes reliability and acceptable tariffs mitigate this risk.
In addition, Cikarang Listrindo average availability factor has been high at more than 90% with low network losses of less than 1%. These customers should provide Cikarang Listrindo with adequate debt service coverage, in addition to PLN's take or pay monthly payments (approximately US$4.6 million/month) regardless of dispatch levels and Cikarang subjected only to a fixed capacity factor of 72%.
Sales terms include full pass-through of gas costs, limiting volatility risks, and payments are in Indonesian rupiah linked to the U.S. dollar at the prevailing rate, thus reducing Cikarang's foreign exchange exposure. In addition, the power plant has an exclusive independent power producer license that enables it to generate and distribute energy to industrial customers within this specific geographic zone.
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