TRIS Rating Affirms Company & Senior Debt Ratings and Outlook of “RATCHGEN” at “AA+/Stable”

TRIS Rating has affirmed the company and issue ratings of Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN) at “AA+” with “stable” outlook. The ratings reflect RATCHGEN’s stable cash flows generated under the long-term power purchase agreements (PPAs) with the Electricity Generating Authority of Thailand (EGAT), well-structured and state-of-the-art Ratchaburi power plant, as well as the company’s proven record of power plant management. The “stable” outlook reflects TRIS Rating’s expectation that RATCHGEN will continue to maintain the plant availability and operating performance in line with the PPA targets. TRIS Rating also expects RATCHGEN to generate a reliable stream of revenue throughout the life of the PPAs, ending from 2025-2027.

RATCHGEN is a wholly-owned subsidiary of Ratchaburi Electricity Generating Holding PLC (RATCH) which is rated “AA+” by TRIS Rating. RATCHGEN is the largest Independent Power Producer (IPP) in Thailand. Its power plant consists of two thermal units and three combined cycle gas turbine (CCGT) units, with total installed capacity of 3,645 megawatts (MW), representing 11% of Thailand’s total installed capacity at the end of 2013. RATCHGEN sells electricity to EGAT under 25-year PPAs and buys natural gas from PTT PLC (PTT) under a 25-year gas sale agreement (GSA).

In 2013, the operating statistics of RATCHGEN’s power plant were satisfactory. The thermal units had a major overhaul in 2013, which lowered the availability level from 97.0% in 2012 to 81.9% in 2013. However, this level was still in line with the PPA’s target. The heat rate of thermal units was 10,359 BTU/kWh. The CCGT units continued to outperform the targets set in the PPA, reaching an average plant availability level of 88.3% and a heat rate of 7,246 BTU/kWh. The dispatch levels for both thermal and CCGT units in 2013 were 28.5% and 70.7%, respectively. These dispatch levels were lower than the levels in 2012 at 31.7% for thermal units and 71.9% for CCGT units. Lower dispatch level typically has little impact on the company’s cash flows since RATCHGEN’s earnings before interest, tax, depreciation and amortization (EBITDA) are mainly generated by Availability Payment (AP) revenue.

RATCHGEN’s electricity sales in 2013 dropped by 7.4% to Bt47,945 million mainly due to lower Energy Payment Revenue (EP) from a decrease in electricity generation. The company’s net profit dropped by a smaller percentage, at 2.1%, to Bt4,765 million, as profitability was mainly driven by AP revenue. In 2013, RATCHGEN’s cash flow protection continued to improve, as total debt decreased from Bt14,700 million at the end of 2012 to Bt12,090 million at the end of 2013. The EBITDA interest coverage ratio improved from 16.9 times in 2012 to 18.2 times in 2013. The ratio of funds from operations (FFO) to total debt also rose from 49.9% in 2012 to 58.2% in 2013. The total debt to capitalization ratio improved from 41.4% at the end of 2012 to 36.7% at the end of 2013, in accordance with the debt repayment schedule. RATCHGEN is expected to pay down its last tranche of debentures, worth Bt721 million, in March 2015.

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