Bangkok--2 Dec--Ratchaburi Electricity Generating Holding
Ratchaburi Electricity Generating Holding PCL. reported its two credit ratings assigned by Moody's Investors Service and S&P Rating.
Moody's Investors Service (Moody's) has assigned a first-time Baa1 rating with the stable outlook to Ratchaburi Holding. This reflects the company's solid market position as the largest independent power producer in Thailand and sound credit profile with stable cash flow generating from its operating plants. It is also a consequence of secured and long-term power purchases agreements (PPAs) with Electricity Generating Authority of Thailand (EGAT), a 100 % government owned integrated utility and gas sales agreements with PTT Public Company Limited. The cost pass-through mechanism built into the tariffs also mitigates the company's exposure to any volatility in fuel prices. Though the company will have to raise more debt to fund both new investments and the construction of new plants at the project level as it continues to expand, Moody's expects the company's adjusted FFO interest coverage will continue to exceed 7x and its FFO/adjusted debt above 30% for the next three years. These ratios are considered strong for its "Baa1 rating".
In Moody's view, the company's credit profile is closely linked to EGAT's, as the latter is the largest shareholder and the sole off-taker for Ratchaburi Holding 's existing generation capacity. The rating also reflects Ratchaburi Holding and EGAT's close linkage to Thailand (Baa1/stable) in view of the two companies' strategic position in the country's power generation and electricity sectors.
Meanwhile, Standard & Poor's Ratings Services (S&P) assigned its "BBB" long-term corporate credit rating with stable outlook to the company. The ratings reflect Ratchaburi Holding's strong PPAs with EGAT, good market position, and conservative financial policy.
In view of S&P, the company has a modest financial risk profile. The company's consistent adjusted free operating cash flows of more than THB 6 billion on account of stable operating performance and investments through joint ventures in moderate size projects support its financial risk profile. In addition, the company has been consistently reducing debt over the past several years. S&P thinks the company's financial metrics are strong as a result. As of year ended December 31, 2009, the company's ratio of funds from operations total debt was 42% and debt to capital was 31%. However, these ratios could deteriorate somewhat because of the company's plans to invest in other countries in 2011.
In terms of liquidity, S&P views that the company's has adequate liquidity. As of September 30, 2010, Ratchaburi Holding had cash and cash equivalents of about THB 10.5 billion. In addition, it had strong cash flow generation with cash from operations of more than THB 7 billion, compared with annual debt maturities of about THB 4 billion over the next two years. S&P expects the company to fund its capital expenditure and investments through internal cash resources and long-term debt, if required. The company is also compliant with its debt covenants. S&P also believes that the company has good access to the local financial markets, although it is yet to access the global financial markets.