Moody’s rates Emirates Sembcorp bonds A2

Moody's Investors Service said it assigned a provisional A2 long-term rating to $400 million of fully amortizing senior secured bonds due 2035 to be issued by Emirates Sembcorp Water & Power Co. PJSC

The outlook is stable.

The issuer is a special purpose vehicle that was established to manage the operation and maintenance of the Fujairah F1 Independent Water and Power Plant located in the Emirate of Fujairah in the United Arab Emirates. The project supplies electricity and water to the UAE, in particular the city of Al Ain and the Northern Emirates.

The issuer benefits from a long-term Power and Water Project Agreement (PWPA) with the Abu Dhabi Water & Electricity Co., the agency explained.

Moody’s said the provisional A2 rating reflects the following credit strengths: (a) A stable and predictable revenue stream emphasized by a long-term offtake contract with a government owned entity; (b) the offtaker, Abu Dhabi Water, is responsible for the supply of natural gas to the plant; (c) the importance of the electricity and water, which the plant supplies to the UAE; (d) equipment is supplied by reputable multinational manufacturers and operational performance has substantially met the requirements of the PWPA; and (e) forecast debt service coverage ratios are stronger than in comparable projects in the agency’s rated portfolio and the financial terms prohibit meaningful additional debt.

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