RAM Ratings reaffirms YTL Power's notes AA1 and AA1/p1

The Star, January 21 2013

KUALA LUMPUR: RAM Ratings Services has reaffirmed YTL Power International Bhd (YTLPI) commercial papers with a long term stable outlook.

RAM Rating Services had on Monday, reaffirmed the AA1 long-term rating of medium-term notes programme of up to RM5 billion (2011/2036), as well as the AA1/P1 ratings of its RM2 billion commercial papers or medium-term notes programme (2007/2014).

It said in a statement that the ratings reflect YTLPI's robust business profile that is underpinned by its base of regulated assets, particularly its investments in power and water-sewerage services via wholly owned YTL Power Generation Sdn Bhd (“YTLPG”) in Malaysia and YTL PowerSeraya Pte Limited (“YTL PowerSeraya”) in Singapore.

However, it said the group capital structure remained constrained by its hefty debt burden of RM22.99 billion as at end-June 2012, with a corresponding adjusted gearing ratio of 2.38 times.

“Taking into account its RM9.63 billion of cash reserves, of which RM8.09 billion is free from encumbrances and will be readily available for the company if required, its adjusted net gearing ratio works out to 1.40 times,” it said.

It said nonetheless, more than 80% of the Group's debts reside with subsidiaries that are viewed to be self-sufficient; we note that these debts are concession-related, ring-fenced and non-recourse to YTLPI.