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UiTM Solar Power’s green SRI Sukuk rating could be downgraded a few notches if it fails to resolve finance service reserve account breach, says MARC Ratings

MALAYSIA: MARC Ratings will continue to monitor developments with regards to UiTM Solar Power to take the appropriate rating action when resolving the MARCWatch Negative placement before its expiry on the 11th January 2023. The rating agency said in a statement that the rating for the RM192.3 million (US$42.2 million) green SRI Sukuk would be downgraded by multiple notches if the UiTM Solar Power’s finance service reserve account (FSRA) breach is not remedied. 

MARC Ratings highlighted that the issuer has not met the six-month minimum required balance in its FSRA for upcoming Sukuk obligations totaling RM16 million (US$3.51 million) in April 2023 due to a further delay in receiving insurance proceeds. UiTM Solar Power has requested for a 30-day indulgence from Sukukholders until the 26th November 2022. 

This follows a previous indication of ongoing concerns by the rating agency on UiTM Solar Power being reliant on insurance proceeds and/or third-party guarantees to meet future financial obligations until residual operational cash flows reach sufficient levels despite the full resumptions of operations of its 50 MWac solar power plant in Gambang, Pahang in August 2022. 

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