Capital markets executive summary | Mon 6 Nov 2023

Capital markets executive summary | Mon 6 Nov 2023

U Mobile converts RM1.4b banking facility into sustainability-linked financing

The conversion was done by CIMB as sustainability structuring agent, sustainability lead arranger and joint lender with UOB Malaysia. U Mobile is entitled to receive rebates on its interest payments after achieving its sustainability performance targets (SPT). Stringent verification by an independent 3rd party is required to determine if the targets have been met. The SPT requires the company to reducing its Scope 1 and 2 carbon emissions through the implementation of energy-efficiency and solar power projects for its business and operations. The company aims to reduce its greenhouse gas intensity by 7.7% in 2023 and 11.4% by 2024 against the 2021 baseline year.

MEX sukuk A2 rating affirmed

RAM Ratings affirmed the rating of MEX I Capital Berhad’s RM1.13b senior sukuk musharakah (2022/2040). The company depends solely on cash flows from 96.8%-owned Maju Expressway Sdn Bhd (MESB). Traffic volume at the highway keeps the company’s finance service coverage ratios with cash balances at 2 times. The rating has been adjusted downwards to A2 because of past governance issues and spending volatility of the transaction parties. Regulatory reform uncertainty sets a ceiling on rating upside. The company receives 39% of its FY2023 revenue as compensation payments, and if the concession term is extended without any toll increases or compensation, the company will be forced to refinance the sukuk to match the lower amount of cash flows. The permissible spending amount is among the highest in RAM’s rated portfolio. Notwithstanding, the company will request that sukukholders approve an increase considering the high traffic volume and inflation. The larger spending could weaken its financial metrics. In FY2023, 60% of budgeted spending is for human resources and administrative matters.
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Yinson’s 285MW Indian solar project commences operation

Rising Sun Energy (K) Pte Ltd, a subsidiary of Yinson Renewables, has begun delivering power to the Rajasthan power grid from its Nokh Solar Park. The project was completed despite the challenging business environment, including the global economic slowdown, rising interest rates, supply chain volatility and regulatory changes. The completion of the Nokh Solar Park expands Yinson Renewables’ footprint in India. The 285MW solar project is the company’s 3rd and largest operating solar project in India after the 175MW Bhadla 1 and 2 solar projects located 33km away. Nokh Solar Park generates enough energy to power 38k households every year and at the same time reducing emissions by 470k tonnes of carbon dioxide per year. Yinson Renewables is well-placed for future opportunities in India’s renewable energy target of 500GW by 2030. Yinson closed at RM2.42.

MyEG’s Zetrix partners Chinese banks for supply chain financing

The blockchain platform Zetrix is partnering with Bank of China on a pilot project that offers supply chain financing products for international importers and exporters. There will be fully digital onboarding, including registration of a Chinese legal entity, bank account opening and credit assessments. Clients enjoy low-cost financing and quicker release of drawdowns. By tracking and verifying the transactions on chain, banks will be able to reduce their risks and enhance their ESG ratings. Zetrix hosts the international supernode of China’s national blockchain, Xinghuo Blockchain Infrastructure and Facilities, which facilitates global trade. Its partnership with Dixchain allows it to offer digital solutions for cross-border trade and finance. The counter closed at 78.5 sen.

Windrose to list in US in 2024

The Chinese electric truck manufacturer is selecting investment banks to raise USD200m. The proceeds are for research, development and production of zero-emission trucks equipped with autonomous driving technology. The company is raising USD100m in a pre-IPO round from, among others, FountainVest Partners, Yunqi Partners and GSR Ventures Management. The company has 1,000 orders in the US and 500 in China, and will start delivering its trucks in 2024. The trucks can carry a full payload across 600km on batteries that take 35 minutes to charge to 65%. Sports product retailer Decathlon, property firm Goodman and Kerry Logistics are helping Windrose test its vehicles in China and Hong Kong. The company is also developing a hydrogen fuel cell truck at the same time.