Any rise in TNB's debt will have a negative impact on its credit profile for financial year 2012, says Moody's
KUALA LUMPUR: Tenaga Nasional Bhd (TNB) may need to increase its debt to fund its working capital if the government fails to offer an interim solution to share the burden of higher fuel costs.
Moody's Investors Service, in its special commentary yesterday, said the national utility company had estimated that it was incurring an added RM300 million a month for an additional RM1.2 billion in such costs in the fourth quarter of this year.
"Any rise in TNB's debt will have a negative impact on its credit profile for financial year 2012.
"Nevertheless, despite rising pressure on interest coverage, the utility firm's rating still has sufficient headroom for higher leverage before it reaches the downgrade trigger of 60 per cent to 65 per cent leverage," it said.
TNB had been tapping its cash reserves to fund higher needs for working capital.
As a result, its cash at hand fell to RM3.9 billion from RM6.3 billion as of August 31 2011 as compared to three months earlier.
The overall leverage remained adequate with adjusted debt to capitalisation at 53 per cent as of August 31.
The research house said gas supplies are expected to improve after Petronas completed its construction of a mobile offshore platform unit at Bekok C early October and shortages will ease further after a regasification terminal begins operations in July next year. - Bernama
KUALA LUMPUR: Tenaga Nasional Bhd (TNB) may need to increase its debt to fund its working capital if the government fails to offer an interim solution to share the burden of higher fuel costs.
Moody's Investors Service, in its special commentary yesterday, said the national utility company had estimated that it was incurring an added RM300 million a month for an additional RM1.2 billion in such costs in the fourth quarter of this year.
"Any rise in TNB's debt will have a negative impact on its credit profile for financial year 2012.
"Nevertheless, despite rising pressure on interest coverage, the utility firm's rating still has sufficient headroom for higher leverage before it reaches the downgrade trigger of 60 per cent to 65 per cent leverage," it said.
TNB had been tapping its cash reserves to fund higher needs for working capital.
As a result, its cash at hand fell to RM3.9 billion from RM6.3 billion as of August 31 2011 as compared to three months earlier.
The overall leverage remained adequate with adjusted debt to capitalisation at 53 per cent as of August 31.
The research house said gas supplies are expected to improve after Petronas completed its construction of a mobile offshore platform unit at Bekok C early October and shortages will ease further after a regasification terminal begins operations in July next year. - Bernama
