Fitch reaffirms SP's 'A+' credit rating

PHOTO: Fitch reaffirms SP's 'A+' credit rating
Above photo is Electricity pylons stand at SP AusNet's electricity transfer station in the outer suburbs of Melbourne, Australia.

SINGAPORE - Singapore Power (SP), which is just starting work on Singapore's $2 billion next-generation power network, has had its "A+" credit rating affirmed by Fitch Ratings.

The mega project involves construction of two ultra-deep, extra-high voltage power transmission tunnels running 18.5 km north-south and 16.5 km east-west of the island.

The tunnels will carry 400 kV power circuits, replacing the current power network of 230 kV circuits, which are 30-40 years old.

The new extra-high voltage circuits will have greater capacity to carry the volume of electricity being generated and transmitted here.

Announcing its latest ratings update on tuesday, Fitch said that the underground cable power project "will not materially erode SP's balance sheet given that it will be spread out over six years".

It affirmed both SP's and SP PowerAssets' long-term foreign and local currency issuer default ratings (IDRs) at "A+" and their short-term foreign currency IDRs at "F1".

(SP PowerAssets owns Singapore's electricity transmission and distribution networks.)

In October - shortly after it awarded construction contracts for the ultra-deep tunnels - SP closed a $1.59 billion loan facility with six banks to help it finance part of the project costs.

Sources earlier said that despite tighter credit availability due to the eurozone crisis, there should be no issue for SP to secure the financing given its creditworthiness.

This was also reflected in its successful raising of almost $900 million from two bonds, one in US dollars and the other in Singapore dollars, in less than a week in September.

SP PowerAssets reportedly sold 20-year, $250 million 3.4 per cent bonds in about 15 minutes that month, following its 10-year, US$500 million 2.7 per cent senior unsecured fixed rate bonds a week earlier.

Fitch said on tuesday that apart from the tangible backing of parent Temasek Holdings, SP's credit profile is also "supported by stable and predictable operating cash flows from its regulated assets in Singapore and Australia - both of which have stable and mature regulatory regimes".

Revenues from SP's electricity and gas distribution assets in Singapore and electricity and gas distribution assets in Australia, held via wholly owned SPI (Australia) Assets Pty Ltd and the 51 per cent owned SP AusNet, account for around 80 per cent of SP's consolidated revenues, Fitch added.