OETC receives ratings from Moody's and Fitch for sukuk, GMTN programmes
Muscat – Oman Electricity Transmission Company (OETC) has received inaugural ratings from both Moody's Ratings and Fitch Ratings for its newly established sukuk and Global Medium-Term Note (GMTN) programmes, supporting the company's capital investment and debt refinancing strategy.
Moody's has assigned a (P)Ba1 rating to the backed senior unsecured trust certificate issuance programme (sukuk programme) of Al Jawaher Assets Company, a special purpose vehicle established by OETC. It has also assigned a (P)Ba1 rating to the senior unsecured GMTN issuance programme established under OETC. The outlook on both ratings is stable, according to Moody's.
Moody's stated that the (P)Ba1 rating on the sukuk programme is at the same level as OETC's Ba1 corporate family rating.
'This is because potential certificate holders (1) will be effectively exposed to OETC's senior unsecured credit risk; (2) will not have any preferential claim or recourse over the trust assets, or rights to cause any sale or disposition of the trust assets except as expressly provided under the transaction documents; and (3) will only have rights against OETC, ranking pari passu with other senior unsecured obligations as provided in the transaction documents,' Moody's said in a statement.
'As such, a change in OETC's rating will be reflected in the ratings of the sukuk programme and any certificates issued under the programme. The sukuk structure will consist of Ijara assets (an asset sale and lease-back transaction). Our rating of the sukuk programme does not express an opinion on the structure's compliance with Shariah law,' the agency added.
In a similar vein, Moody's has also assigned a (P)Ba1 rating to the new GMTN programme. Bonds issued under the GMTN programme will rank pari passu with other senior unsecured obligations of OETC.
'As part of its funding plans, OETC is expected to issue bonds and sukuk under these newly established programmes for general corporate purposes, including the refinancing of existing debt and funding of ongoing capital investments,' Moody's added.
Moody's noted that OETC's ratings continue to be supported by: a stable and transparent regulatory framework for electricity transmission and the independence of the regulator; the cost-recovery mechanisms within the regulatory framework; the low business risk profile of electricity transmission activities; the company's monopoly position in Oman; and supportive shareholders.
The stable outlook reflects Moody's expectation of OETC's sustained operating performance over the next 12 to 18 months.
Meanwhile, Fitch Ratings has assigned a 'BB+' rating to OETC's sukuk trust certificate programme, issued through trustee Al Jawaher Assets Company. Fitch has also given a 'BB+' rating to the company's GMTN programme.
'The ratings reflect the programmes' final terms and are in line with OETC's Long-Term Issuer Default Rating (IDR) and senior unsecured rating. OETC is using the proceeds for general corporate purposes, including capital expenditure and debt refinancing,' Fitch said in a statement.
It added that the sukuk programme's rating is aligned with OETC's IDR. This reflects Fitch's view that a default on these senior unsecured obligations would constitute a default by OETC, in accordance with the agency's rating definitions.
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