By G. Sharmila
Standard & Poor’s Ratings Services (S&P) said today that Tenaga Nasional Bhd’s failed bid for 1Malaysia Development Bhd’s power assets has not affected the its ratings or outlook.
“In our view, Edra’s assets would have further strengthened Tenaga’s competitive position, particularly in Malaysia,” S&P said in a statement today. “But the bid valuation and the funding strategy for the acquisition might have led to a weaker capital structure for Tenaga.”
The global ratings agency pointed out that details of Tenaga’s bid for Edra have not been disclosed. “But the fact that Tenaga’s bid did not emerge as the winning bid suggests to us that the company seeks to balance its funding profile and leverage levels – and hence creditors’ interests – with its expansion plans. This underpins our view that satisfactory governance measures are in place within Tenaga,” S&P added.
It said that Tenaga’s dominant position as an integrated power provider in Malaysia underpins its business risk profile.
“At the same time, we expect the company’s financial risk profile to be mostly unchanged despite an increase in capital expenditure, with the debt-to-earnings before interest, tax, depreciation and amortisation ratio staying below four times through 2016. Our expectations also assume revisions in tariffs for any under- or over-recovery of fuel costs,” it said.
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