[RAM] RAM Ratings further downgrades SPR Energy's Senior Sukuk to C1; outlook negative

RAM Ratings has downgraded the rating of SPR Energy (M) Sdn Bhd’s (SPR or the Company) Senior Sukuk (the Sukuk) to C₁/negative from B₁/negative, reflecting the Company’s persistently weak capacity to meet sukuk obligations in full. The negative outlook reflects a high likelihood of default, which RAM expects to materialise by July 2027 in the absence of effective remedial measures.

Following the sukuk payment obligations on 19 January 2026, SPR was unable to meet its minimum Finance Service Reserve Account (FSRA) requirement, although that was subsequently addressed on 8 April 2026. We also understand that management is exploring remedial options and has appointed a scheme advisor for a proposed restructuring exercise; however, discussions remain at an early stage and are not yet sufficiently defined to mitigate near-term liquidity risk.

After relatively smooth operations in fiscal 2024, SPR’s combined-cycle gas turbine plant in Kimanis recorded a significant increase in unscheduled outages to 779 hours in fiscal 2025 (fiscal 2024: 365 hours), attributed to multiple operational issues. Consequently, SPR incurred Availability Capacity Payment (ACP) losses of RM12.4 million in fiscal 2025 (fiscal 2024: RM3.0 million), exceeding RAM’s earlier projection of RM8.4 million. The Company also swung to a pre-tax loss of RM10.4 million (fiscal 2024: pre-tax profit of RM2.2 million). Although there were no unscheduled outages between November 2025 and January 2026 and ACP loss in February 2026 was minimal, we remain cautious on future plant performance due to its volatile operational track record.

Under RAM Ratings’ sensitised downside scenario, SPR is expected to face an estimated funding shortfall of about RM10 mil on the July 2027 payment date, and remains vulnerable to further FSRA breaches, underscoring the limited margin for operational or financial underperformance.

SPR’s business fundamentals remain supported by its power purchase agreement (PPA) with sole offtaker, Sabah Electricity Sdn Bhd (SE) that provides a degree of revenue and cost stability. The Company earns fixed ACPs irrespective of dispatch volumes, subject to meeting unscheduled outage limits. SPR may also fully pass through fuel expenses if its heat rate parameters are met, which has consistently been adhered to. While SE is a strong counterparty and paymaster due to ongoing federal government support, on its own, this is insufficient to offset SPR’s current liquidity constraints and operational execution risks.


Analytical contacts
Karin Koh, CFA
(603) 2708 8237
karin@ram.com.my

Chong Van Nee, CFA
(603) 2708 8210
vannee@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my